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Exploring Itemized Deductions

Wages: Michael $($$$75,000),$ Emily $($$$58,000)$

Interest Income: $$1,200$

Dividend Income: $$900$

Long$-$term capital gains: $$2,800$

QBI $($sole proprietorship$)$: Michael $($$$45,000)$

Itemized Deductions:

Medical Expenses: $$5,200$

State and Local Taxes: $$9,500$

Charitable Contributions: $$4,000$

Allowable deduction for self$-$employment tax: $$3,200$

Calculate: AGI, Taxable Income, Potential Child Tax

Standard Deduction vs$.$ Itemized

Wages: John $($$$54,000),$ Sarah $($$$48,000)$

Interest Income: $$2,300$

Dividend Income: $$550($qualified dividends$)$

Long$-$term capital gains: None

QBI $($sole proprietorship$)$: None

Itemized Deductions:

Medical Expenses: $$3,000$

State and Local Taxes: $$8,300$

Charitable Contributions: $$2,100$

Allowable deduction for self$-$employment tax: None

Calculate:

AGI, Taxable Income, Potential Child Tax Credits, Total Tax Liability $($Before any other credits$)$ using ITEMIZED deductions.

Repeat the calculations using the STANDARD deduction and compare the results.