Irene is a resident of a state that imposes an income tax. Information regarding
ID: 2656477 • Letter: I
Question
Irene is a resident of a state that imposes an income tax. Information regarding Irene's state income tax transactions is as follows:
Taxes withheld this year $5,400
Refund received this year from overpayment
of last year's tax liability 1,200
Deficiency assessed for two years ago
(as a result of audit by the state) 2,000
Interest on the deficiency 300
Both the two-year-old deficiency and interest thereon were paid by Irene this year. If Irene elects to itemize her deductions this year, how much of the above transactions can be claimed?
$7,700
$7,430
$7,400
$6,230
None of the above.
a.$7,700
b.$7,430
c.$7,400
d.$6,230
e.None of the above.
Explanation / Answer
Deductible state income taxes are:
Taxes withheld this year $5,400
Deficiency assessed for two years ago
(as a result of audit by the state) 2,000
Total allowable itemized decudtions is 7,400
Thus, correct option is - 7,400
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