Question

1. For calendar year 2017, Thurston and Eunice Howell (ages 59 and 60) file a joint return reflecting AGI of $280,000. They incur the following expenditures:
   

Medical expenses before 10%-of-AGI floor	$30,000
Casualty loss (not covered by insurance) before statutory floors	30,000
Interest on home mortgage	10,000
Interest on credit cards	800
Property taxes on home	13,000
Charitable contributions	17,000
State income tax	15,000
Tax return preparation fees	1,200

What is the amount of itemized deductions the Thurstons may claim?

Answer 1

			Allowable deduction
	Medical expenses before 10%-of-AGI floor	30000	9000	Working 1
	Casualty loss (not covered by insurance) before statutory floors	30000		Working 2
	Interest on home mortgage	10000	10000	Note 1
	Interest on credit cards	800	0	Note 2
	Property taxes on home	13000	10000	Note 3
	Charitable contributions	17000		Working 3
	State income tax	15000	0	Note 3
	Tax return preparation fees	1200	0	Note 4
Workings
1	Medical expenses before 10% floor (currently this is 7.5%)	30000
	less : 7.5% of AGI ($280,000)	-21000
		9000
2	Casualty Loss before statutory floor	30000
	Less : $100 statutory floor	-100
	Loss after $100 floor	29900
	Less: 10 % of AGI	-2990
	Casualty Loss deduction	26910
3	Charitable Contribution deduction is limited to 60% of AGI in 2019 which is 168,000,
	hence full $17,000 is deductible
Notes
1	Interest on home mortgage is an itemized deduction
2	Interest on credit card is a personal expense and hence not an itemized deduction
3	the total amount of deductible state and local income taxes, including property taxes, is limited to $10,000 per year
	hence the amount of property tax of $13000 and state income tax of $15000 is limited to $10,000 per year
4	Tax return preparation fees is no longer an itemized deduction