Determine Allowable Itemized Deductions Practice Test

Nora is head of household with AGI of $75,000 and is evaluating whether to itemize. She paid $7,000 of unreimbursed medical expenses (deductible only above $,7.5%$ of AGI), $8,700 of state and local taxes (subject to a $10,000 cap), $5,200 of qualified home mortgage interest, and $1,900 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)?