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Critical Thinking

Decision Making

LO$\mathrm{.}1$ Daniel, age $38,$ is single and has the following income and expenses in $2024$:

Salary income $$86,000$

Net rent income $6,000$

Dividend income $3,500$

Payment of alimony $($divorce finalized in March $2022)12,000$

Mortgage interest on residence $11,900$

Property tax on residence $3,200$

Contribution to traditional IRA $7,000$

Contribution to United Church $2,100$

Loss on the sale of real estate $($held for investment$)2,000$

Medical expenses $3,250$

State income tax $2,800$

Federal income tax $9,700$

Calculate Daniel$$s AGI.

Should Daniel itemize his deductions from AGI or take the standard deduction? Explain.

Critical Thinking

Planning

LO$\mathrm{.}1$ Mar$$a$,$ age $32,$ earns $$60,000$ working in $2024.$ She has no other income. Her medical expenses for the year total $$6,000.$ During the year, she suffers a casualty loss of $$9,500$ when her apartment is damaged by flood waters $($part of a Federally declared disaster area$).$ Mar$$a contributes $$6,000$ to her church and pays $$4,000$ of state income taxes. On the advice of her friend, Mar$$a is trying to decide whether to contribute $$5,000$ to a traditional IRA. What effect would the IRA contribution have on Mar$$a$$s itemized deductions?

Decision Making

LO$\mathrm{.}1$ Daniel, age $38,$ is single and has the following income and expenses in $2024$:

Salary income $$86,000$

Net rent income $6,000$

Dividend income $3,500$

Payment of alimony $($divorce finalized in March $2022)12,000$

Mortgage interest on residence $11,900$

Property tax on residence $3,200$

Contribution to traditional IRA $7,000$

Contribution to United Church $2,100$

Loss on the sale of real estate $($held for investment$)2,000$

Medical expenses $3,250$

State income tax $2,800$

Federal income tax $9,700$

Calculate Daniel$$s AGI.

Should Daniel itemize his deductions from AGI or take the standard deduction? Explain.

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