Question 3 of 15.

The taxpayer estimates they will pay $5,000 in real estate taxes, $7,000 in state withholdings, and personal property taxes of $300. They want to know how much they will be able to deduct. What will you advise them?

You explain the deduction for state and local income taxes is limited to $10,000. Out of the $12,300 they paid, they will be able to deduct $10,000.

You explain they will not be able to deduct their real estate taxes, but will be able to deduct the state withholdings and the personal property tax for a total of $7,300.

You explain that since their state withholdings are under $10,000, they will be able to deduct the total of $12,300 in taxes paid.

You explain that personal property taxes are no longer deductible, leaving their deduction at $12,000.