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Given the following? information, would it be better for Illinois resident Salem Marcos to itemize her sales tax or her state income tax on her federal tax? return? Federal taxable income ?$51,700
Given the following? information, would it be better for Illinois resident Salem Marcos to itemize her sales tax or her state income tax on her federal tax? return?
Federal taxable income
?$51,700.00
Federal marginal income tax rate
25?%
State taxable income
?$41,730.00
State income tax rate
3?%
Total sales tax paid
?$1,353.40
Assume that Salem has sufficient itemized deductions to choose itemization method over the standard deduction.
It would be better for Illinois resident Salem Marcos? to: ?(Select best answer? below.)
A.
Itemize sales tax.
B.
Itemize state income tax.
C.
No Difference between the two
If she makes the effort to track the sales tax she? paid, on her federal income taxes Salem Marcos could save ?$
___________ ?(Round to the nearest? cent.)
Expert Solution
Given,
Salem Marcos State Taxable Income = $41,730
State Income Tax Rate = 3%
So,
State Income Tax = $41,730 * 3% = $1,251.90
Total Sales Tax Paid = $1,353.40
It would be better to itemize sales tax paid as the amount is higher than state income tax.
So, the correct option is A "Itemize sales tax".
If she makes the effort to track the sales tax she? paid, on her federal income taxes Salem Marcos could save ?($1353.40-$1251.90)*25% = $25.375
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