Question
Frank and Sandy are married and file a joint federal income tax return each year. In each of 2020 and 2021, Frank will earn wages
Frank and Sandy are married and file a joint federal income tax return each year. In each of 2020 and 2021, Frank will earn wages of $185,000 and will have $5,000 of interest income from McDonalds Corporation bonds. In each of 2020 and 2021, Sandy will receive gifts of $10,000 from her mother. They have no other income and no for AGI deductions in 2020 and 2021.
Frank and Sandy anticipate the following itemized deductions in 2020 and 2021:
|
| 2020 | 2021 |
| State income taxes | $3,000 | $3,000 |
| Home mortgage interest | $7,000 | $7,000 |
| Charitable contributions | $20,000 | $20,000 |
Frank and Sandy recently learned that they might be able to save some federal income taxes if they accelerate their 2021 charitable contributions of $20,000 into 2020, so that they pay $40,000 of charitable contributions in 2020 and none in 2021.
If all relevant 2021 tax amounts (tax brackets, standard deduction amount) remain the same as in 2020, how much federal income tax over the 2 years could Frank and Sandy save by accelerating their 2021 charitable contributions into 2020?
Answer:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Life Audit Workbook Meant For More
Authors: Agnese Iskrova
1st Edition
1716274958, 978-1716274954
