IRS Deductions and Credits 2

Question 1

A taxpayer pays $8,000 in mortgage interest and $3,500 in state income taxes. The standard deduction is $13,850 (single). What is the most beneficial filing approach?

Accepted Answer

Take the standard deduction of $13,850

Answer

Itemize deductions for $11,500 total

Answer

Split deductions between standard and itemized

Answer

Always itemize regardless of amount

Question 2

Under the SALT deduction cap established by the Tax Cuts and Jobs Act, what is the maximum deductible amount for state and local taxes?

Accepted Answer

$10,000

Answer

$5,000

Answer

$15,000

Answer

Unlimited

Question 3

Which of the following medical expenses is NOT deductible on Schedule A?

Accepted Answer

Cosmetic surgery for appearance enhancement

Answer

Prescription medications

Answer

Hearing aids

Answer

Long-term care insurance premiums

Question 4

A married couple filing jointly has an AGI of $200,000 and $18,000 in medical expenses. How much can they deduct?

Accepted Answer

$3,000

Answer

$18,000

Answer

$2,000

Answer

$0

Question 5

The Child Tax Credit in 2023 is worth up to how much per qualifying child under age 17?

Accepted Answer

$2,000

Answer

$500

Answer

$1,000

Answer

$3,600

Question 6

Which filing status allows the highest standard deduction?

Accepted Answer

Married Filing Jointly

Answer

Single

Answer

Married Filing Separately

Answer

Head of Household

Question 7

A taxpayer donates stock with a fair market value of $5,000 (cost basis $1,000) to a qualifying charity. How much can they generally deduct?

Accepted Answer

$5,000 (fair market value)

Answer

$1,000 (cost basis only)

Answer

$2,500 (average of basis and FMV)

Answer

$4,000