The Impact of Itemized Deductions on Tax Filings

When Norma paid $1,200 of real estate taxes on her personal residence and her other itemized deductions for state income taxes amounted to $3,100, the total of these deductions added up to $4,300. This total amount of itemized deductions is crucial in reducing Norma's taxable income and determining the final tax liability.

Itemized deductions, such as real estate taxes and state income taxes, allow taxpayers to reduce their taxable income by the total amount of these deductible expenses. In Norma's case, these deductions helped lower her taxable income, therefore potentially reducing the amount of tax she owed to the government.

It is important to note that itemized deductions are reported on Schedule A of Form 1040 when filing taxes in the United States. Taxpayers have the option to either itemize their deductions, like Norma did with her real estate taxes and state income taxes, or take the standard deduction provided by the IRS.

Furthermore, Norma's decision to file as single with one personal exemption affects her adjusted gross income in conjunction with her itemized deductions. The personal exemption she claimed reduced her adjusted gross income, separate from the total amount of itemized deductions she could claim.

In conclusion, the combination of real estate taxes, state income taxes, and the personal exemption impact Norma's tax filings and contribute to determining her final tax liability. Understanding how itemized deductions work is essential for taxpayers to optimize their tax returns and potentially reduce the amount of taxes they owe.