Betty paid $5,000 of state income taxes in 2011. She also paid $75 in vehicle/pr

Question

Betty paid $5,000 of state income taxes in 2011. She also paid $75 in vehicle/property taxes to renew her vehicle as well as $3400 in real estate taxes on a lot of land she owns in Hawaii. She also paid $2500 in sales tax on the purchase of a new boat during 2011. What is her itemized deduction for Taxes paid for the year?Hint: Review rules for deducting sales tax (it's either / or!) Betty paid $5,000 of state income taxes in 2011. She also paid $75 in vehicle/property taxes to renew her vehicle as well as $3400 in real estate taxes on a lot of land she owns in Hawaii. She also paid $2500 in sales tax on the purchase of a new boat during 2011. What is her itemized deduction for Taxes paid for the year?Hint: Review rules for deducting sales tax (it's either / or!)

Explanation / Answer

You can only deduct either state income tax or sales tax but not both

Hence, itemized deduction would be

= 5000( state income tax) + 75( vehicleor property taxes) + 3400( real estate taxes)

= 8475

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