Imagine that a new tax law permits taxpayers to choose between taking an itemized deduction for cash charitable contributions or claiming a nonrefundable tax credit for the first $1,000 of cash charitable contributions (with the excess contributions nondeductible and no carryback or forward of excess amounts). For example, a taxpayer who gives $3,000 to charity may choose between claiming a $3,000 itemized deduction or a $1,000 credit. 

In each of the following situations, advise the taxpayer whether they should claim the itemized deduction or the new credit for charitable contributions (and support your answer with calculations). Each taxpayer is single. Use 2019 tax rates and other tax law. 

Taxpayer A gave $6,000 to charity. This taxpayer has $90,000 AGI and no other itemized deductions besides the charitable contribution. 

Taxpayer B gave $4,000 to charity. This taxpayer has $200,000 AGI and other itemized deductions of $14,000. 

Taxpayer C gave $5,000 to charity. This taxpayer has $120,000 AGI and other itemized deductions of $11,000.

Answer rating: 100% (QA)

Tax Rates of 2019 for Single tax fi Taxable Income Tax Rate 09700 10 970139475 12 39476 84200 22 842... View the full answer