5.5 Reducing Your Form 1040 Tax Liability

The Kivetsky family had an adjusted gross income of $119,245.61. They included medical deductions on Schedule A. They had $14,191 in medical expenses. Medical insurance covered 80% of these expenses. The IRS allows medical and dental expenses deductions for the amount that exceeds 7.5% of a taxpayer’s adjusted gross income. How much can they claim as a medical deduction?

(a)  

The Holfester family took 5 1/2 hours to gather information for their Schedule A. The itemized deductions saved them $4,095 in taxes. What was the mean savings per hour to fill out Schedule A? Round to the nearest dollar.

(a)  

The Lowatsky family had $9,441 worth of hurricane damage that was not covered by insurance. They need to follow IRS procedures to take a casualty deduction on Schedule A.

The IRS requires that $100 be deducted from each casualty. What is the total casualty loss after the $100 is deducted?

(a)  

The Lowatsky family had $9,441 worth of hurricane damage that was not covered by insurance. They need to follow IRS procedures to take a casualty deduction on Schedule A.

Their adjusted gross income is $67,481. Find 10% of their adjusted gross income.

(a)  

The Lowatsky family had $9,441 worth of hurricane damage that was not covered by insurance. They need to follow IRS procedures to take a casualty deduction on Schedule A.

Their Schedule A casualty deduction can be found by subtracting 10% of the adjusted gross income from $9,341. What is their casualty loss deduction?

(a)  

Mike pays $8,000 in property taxes, and receives a 28% tax deduction for it by using Schedule A. What is Mike's net expense for property taxes?

Jake and Gloria are married, filing jointly. Their taxable income without deductions was $120,440. They were able to reduce their total income by $25,381 using Form 1040 and Schedule A. How much did they save in tax by claiming those deductions.

(Use formula $$y=0.22x-8283$$ for taxable income without deductions & tax table states $12,634 for adjusted income)

(a)  

Sarah donates $5,000 to a charity and claims a 20% tax deduction on her Schedule A. What is Sarah's net expense for the donation?

John incurs $10,000 in medical expenses and receives a 15% tax deduction using Schedule A. What is John's net expense for medical expenses?

Emily pays $12,000 in mortgage interest and gets a 25% tax deduction on her Schedule A. What is Emily's net expense for mortgage interest?