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Sebastian (Age 46) and Kaitlin (Age 45) Are Married and File

question 74

Multiple Choice

Sebastian (age 46) and Kaitlin (age 45) are married and file a joint tax return. Their 2018 adjusted gross income is $390,000 and includes $2,600 in investment income ($2,000 in short-term capital gains and $600 of interest income) . They provided 100% of the support for their daughter, Olivia, age 26, who lives with them, and earned $4,700 from her part-time job. They also provided 100 percent of the support for Sebastian's mother, Emily, who is 67, blind, and lives in a nursing home. Emily received $4,000 in Social Security benefits and $450 of interest income. Sebastian and Kaitlin also paid the following amounts in 2018: -$38,500 interest on their home mortgage (acquisition debt) on their principal residence purchased in 1995. The principal amount of the mortgage is $1,250,000. They also paid $8,250 in real estate taxes on the home.
-$6,000 investment interest expense
-$7,600 unreimbursed employee business expenses (none for meal or entertainment expenses)
-$1,650 in state income taxes to the state of California where Sebastian worked for part of the year
-$1,400 in state and local general sales taxes
-$490 fee for preparation of their 2017 tax return, paid to their CPA in 2018
-$2,500 contributed to the State University Athletic Booster Club (to allow them to purchase tickets in good seat locations for football games) and $1,000 contributed to the State University Business School Alumni Association for academic scholarships. They also donated a painting (purchased 11 years ago for $4,200) to the Salvation Army, which was then sold for its fair market value of $17,000 at its fundraising auction.
How much can Sebastian and Kaitlin deduct for interest expense for 2018?

Definitions:

Healthcare Delivery

The provision of health care services by various providers and institutions to patients, encompassing prevention, treatment, and management of illness.

Electronic Health Records

Digital version of a patient’s paper chart, which includes medical history, treatments, and clinical data.

Preventive Care

Healthcare services and practices aimed at preventing diseases or identifying them early before symptomatic, to reduce or eliminate their impact.

Medication

Substances used to diagnose, treat, or prevent disease and relieve symptoms, often prescribed by healthcare professionals.