Question
Janice, age 32, earns $50,000 working in 2019. She has no other income. Her medical expenses for the year total $5,250. During the year, she
Janice, age 32, earns $50,000 working in 2019. She has no other income. Her medical expenses for the year total $5,250. During the year, she suffers a casualty loss of $7,500 when her apartment is damaged by flood waters (part of a Federally declared disaster area). Janice contributes $10,000 to her church. On the advice of her friend, Janice is trying to decide whether to contribute $1,000 to a traditional IRA. Complete the table to show the effect the IRA contribution would have on Janice's itemized deductions.
With IRA Contribution Without IRA Contribution Gross income $ 50,000 $ 50,000 Contribution to IRA (1,000) 0 AGI $ 49,000 $ 50,000 Itemized deductions: Charitable contribution $ 10,000 $ 10,000 Medical expenses $ 350 $ 250 Casualty loss $ 2,500 $ 2,400 Total itemized deductions $ 12,850 $ 12,650 The $1,000 IRA contribution would increase Janice's itemized deductions by $ 200 . As a result, the $1,000 IRA contribution reduces her taxable income by $-_______ .
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