If the return includes Schedule A, we will summarize the various itemized deductions noted on the return. We will also compare the itemized deduction amount to the standard deduction.
As a MFJ couple, Peter and Paula's standard deduction in 2023 was $27,7000. Since the itemized deductions of $42,000 were higher than the standard deduction, they elected to itemize. The itemized deductions were:
- $10,000 of deductible state and local taxes. Note that Peter and Paula's total amount of state and local taxes (including real estate and property taxes) was $14,500 (Lines 5-7 of Schedule A). But the Tax Cuts and Jobs Act of 2017 (TCJA) limits the deduction that taxpayers can take for state and local taxes to just $10,000, regardless of filing status.
- $22,000 of mortgage and investment interest expense
- $10,000 of gifts to charity
- $42,000 Total Itemized Deductions