Maximize Your Tax Deductions: A Case Study on Norma's Real Estate Taxes

Question:

Which of the following is a true statement if Norma files single with one personal exemption?

Answer:

The correct statement is B. Norma can deduct $1,200 even if her standard deduction is $6,200.

Explanation:

Itemized Deductions vs. Standard Deduction:

Itemized deductions are expenses that individuals can deduct from their taxable income, reducing the amount of tax they owe. One of the itemized deductions is real estate taxes paid on a personal residence. In this case, Norma paid $1,200 of real estate taxes, which can be deducted from her taxable income.

The standard deduction, on the other hand, is a fixed amount that individuals can choose to deduct instead of itemizing their deductions. If Norma's standard deduction is $6,200, she can still deduct the $1,200 of real estate taxes regardless. The standard deduction is a minimum deduction available to all taxpayers, regardless of their itemized deductions.

So, even if Norma's other itemized deductions (state income taxes) amount to $3,100, she can still deduct the $1,200 of real estate taxes. Therefore, option B is the correct statement in this case.