For calendar year 2017, Stuart and Pamela Gibson file a joint return reflecting

Question

For calendar year 2017, Stuart and Pamela Gibson file a joint return reflecting AGI of $342,100. Their itemized deductions are as follows. Note: All expenses are before any applicable limitations, unless otherwise noted.

Round your final answers to the nearest whole dollar.

The Gibson's total itemized deductions before any phaseout are $.

The Gibson's total itemized deduction is $.

Casualty loss after $100 floor (not covered by insurance) $56,800 Home mortgage interest 22,720 Credit card interest 1,136 Property taxes on home 17,040 Charitable contributions 31,240 State income tax 19,880 Tax return preparation fees 1,704

Explanation / Answer

Total itemized deductions before phaseout= 56800+22720+1136+17040+31240+19880+1704= $ 150520

Since AGI of the Gibsons exceeds the minimum AGI limit for full itemized deductions, they will get only partial itemized deductions. The upper limit of AGI for full itemized deductions for married couple filing jointly is $ 313800 whereas the Gibsons have declared AGI of $342100. Therefore, as per the law, itemized deductions for the Gibsons will be either reduced by 3% of the amount that Gibsons' AGI exceeds the AGI limit or 80% of the total itemized deductions, whichever is lesser. Gibsons' AGI exceeds the limit by= 342100-313800=$ 28300. 3% of this amount = 0.03x28300=$849. 80% of total itemized deductions= 0.08x150520= $12041.60. Therefore, $849 is lesser amount. So, total itemized deduction of the Gibsons will be= 150520-849= $149671.

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