Question

Daniel, age 38, is single and has the following income and expenses in 2018:Salary income $60,000Net rent income 6,000Dividend income 3,500Payment of alimony in accordance with the separation agreement which was signed in 2018 12,000Mortgage interest on residence 9,900Property tax on residence 1,200Contribution to traditional IRA (assume the amount is fully deductible) 5,000Contribution to United Church 2,100Loss on the sale of real estate (held for investment) 2,000Medical expenses 3,250State income tax 300Federal income tax 7,0001) What is Daniel's gross income?2) What is Daniel's AGI?3) What is Daniel's Total itemized deductions (after any limitations)? This is all for 2018.

Answer 1

Answer:

Explanation:

Payment of Alimony ⇒ Deductible For AGI    

Mortgage interest on residence   ⇒ Deductible From AGI    

Property Tax on Residence   ⇒ Deductible From AGI    

Contribution to traditional IRA  ⇒ Deductible For AGI    

Contribution to United Church  ⇒  Deductible From AGI    

Loss on sale of real estate ⇒   Deductible For AGI    

Medical Expenses   ⇒  Deductible From AGI    

State Income Tax  ⇒  Deductible From AGI    

Federal Income Tax  ⇒  Not Deductible    

∴Gross Income:      

Salary Income                                                        60,000

   

Net Rent                                                                  6,000    

Dividend Income                                                    3,500    69,500

∴Deduction for AGI:    

Payment of Alimony                                             12,000    

Contribution to traditional IRA                            5,000    

Loss on sale of real estate                                  2,000         19,000    

Adjusted Gross Income                                                         50,500

∴ Itemized Deduction      

Mortgage interest on residence                                      4,900    

Property Tax on Residence                                              1,200    

Contribution to United Church                                       2,100    

State Income Tax                                                                 300    

Medical Expenses[$3250 - ($50500× 7.50%)]                 ----    

∴Total Itemized Deduction                                              8,500