I am a student taking a taxation class in college and need help with a problem, please. I will post the problem below. I am struggling with the itemized deductions. I have 1400 sales tax + 1450 property tax + 4500 mortgage interest + 2400 charitable donations = 9750. The teach has already confirmed that the correct answer should be 18,750, but I cannot figure out how to come up with that number. It seems people who used H&R Block software are being told to take a "standard deduction" for state income tax in the amount of 10,400 in lieu of taking the 1400 general sales tax deduction. I am using Turbo Tax and was not advised to do that. I cannot find anywhere in TurboTax to even enter such information and even if I did. The already submitted the assignment, but really want to understand where I went wrong. Any help would be much appreciated.

The problem to solve

Alfred E. Old and Beulah A. Crane, each age 42, married on September 7, 2013. Alfred and Beulah will file a joint return for 2015. Alfred's Social Security number is 111-11-1112. Beulah's Social Security number is 123-45-6789, and she adopted “Old” as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304.

Alfred was divorced from Sarah Old in March 2013. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah's death, whichever occurs first. Alfred pays Sarah $15,000 in 2015. In addition, in January 2015, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years' income taxes. Sarah's Social Security number is 123-45-6788.

Alfred's salary for 2015 is $150,000, and his employer, Cherry, Inc. (Federal I.D. No. 98-7654321), provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes.

Beulah recently graduated from law school and is employed by Legal Aid Society, Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives a salary of $40,000 in 2015. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes.

Beulah has $2,500 in qualified dividends on Yellow Corporation stock she inherited. Alfred and Beulah receive a $1,900 refund on their 2013 state income taxes. They itemized deductions on their 2014 Federal income tax return (total of $15,000). Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2014. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Both spouses had health insurance for all months of 2015 and do not want to contribute to the Presidential Election Campaign.

Compute the Olds' net tax payable (or refund due) for 2015. If you use tax forms for your solution, you will need Form 1040 and Schedules A and B.


The $10,400 is in the question, in two pieces. His employer withheld $8000, and her employer withheld $2400. Thus they paid together $10,400 in income taxes, which are deductible if you itemize deductions and choose income taxes over sales taxes (you can deduct one or the other). There's nothing "standard" about the amount, though it is standard to take the income tax deduction (almost always higher than sales tax).

  • 2
    +1. The state income tax deduction is usually higher than sales tax in states that have income tax. If you are in a state that doesn't have state income tax, you would take the sales tax deduction. In the question, the couple would definitely take the state income tax deduction, because they paid more in state income tax than they did in sales tax. – Ben Miller Oct 11 '16 at 3:38
  • Thank you gentlemen so much for your help. Since I did not have actual the actual "W-2" to work with and this was a "federal" return, I left the "state" portion blank. In retrospect, it makes sense that I should have entered it there also. Thanks again. – kadus Oct 11 '16 at 13:50

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