Sofia Marchetti files as single for 2024 and her standard deduction is 14,600 dollars. Her itemised items are: 12,000 dollars in combined state income and property taxes, 4,000 dollars of qualified home mortgage interest, and 1,500 dollars of cash charitable gifts. Applying the relevant limits, which deduction gives her the lower taxable income and by how much does it exceed the alternative?
- AItemising, which exceeds the standard deduction by 900 dollars Correct
- BItemising, which exceeds the standard deduction by 2,900 dollars
- CThe standard deduction, which exceeds itemising by 900 dollars
- DItemising, which exceeds the standard deduction by 400 dollars
Why A is correct: State and local taxes cap at 10,000; itemised total is 10,000 plus 4,000 plus 1,500 equals 15,500, which exceeds the 14,600 standard deduction by 900 dollars.
Why B is wrong: This uses the uncapped 12,000 dollars of state and local taxes (12,000 plus 4,000 plus 1,500 equals 17,500), but those taxes are capped at 10,000 dollars before comparison.
Why C is wrong: This reverses the comparison; the capped itemised total of 15,500 is larger than the 14,600 standard deduction, so the standard deduction does not give the lower taxable income.
Why D is wrong: This caps the taxes correctly but counts only 1,000 of the 1,500 dollar charitable gift (10,000 plus 4,000 plus 1,000 equals 15,000), understating the itemised total of 15,500 dollars.