Determine Allowable Itemized Deductions Practice Test

Chloe is head of household with AGI of $110,000 and is deciding whether to itemize. She paid $9,000 in unreimbursed medical expenses (deductible only above $,7.5%$ of AGI), $10,000 of state and local taxes (already at the cap), $6,700 of qualified home mortgage interest, and $2,500 of cash charitable contributions. The standard deduction for head of household is $21,900. How should the taxpayer optimize their deductions to minimize taxable income?

Natalie is single with AGI of $200,000 and lives in a high-tax jurisdiction. She paid $17,000 of state income taxes and $6,000 of real property taxes (SALT capped at $10,000), $12,000 of qualified home mortgage interest, $3,000 of cash charitable contributions, and $25,000 of unreimbursed medical expenses (deductible only above $,7.5%$ of AGI). What is the impact of the SALT deduction cap on Natalie’s return (i.e., by how much are her SALT payments reduced for itemized deduction purposes)?