Itemized Deductions (LO. 4)
Paula lives in Arkansas, which imposes a state income tax. During 2019, she pays the following taxes: Federal tax withheld $5,125 State income tax withheld 1,900 State sales tax – actual receipts 370 Real estate tax 1,740 Property tax on car (ad valoreum) 215 Social Security tax 4,324 Gasoline taxes 124 Excise taxes 112
Refer to only Exhibit 8-3 to answer the following questions. Note: Exhibit 8-3 refers to the 2018 IRS table since the 2019 table is not available at the time.
a. If Paula’s adjusted gross income is $35,000 what is her allowable deduction for taxes? $_3,855_
b. Assume the same facts as in part a, except that Paula pays $1,600 in sales tax on a motor vehicle she purchased during the year. What is Paula’s allowable deduction for taxes? (use the sales tax table value of $554 to get the correct answer for the b part of the problem)
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