Questions:
Sallie is completing her 2024 Form 1040 with a filing status of Single. Her taxable income for the year is $185,000. She paid $7,000 in mortgage interest, $1,800 in property taxes, $1,000 in sales taxes, and $5,300 in state income taxes. She has no other expenses eligible for itemized deductions. Considering the standard deduction for Single filers is $14,600, should Sallie itemize her deductions or take the standard deduction

Now, imagine that Sallie is married but chooses to file separately from her spouse. Her husband has already filed his 1040 and decided to itemize his deductions. How does this impact Sallie's options?

Reference answers:
First, we must determine the maximum amount of itemized deductions available to Sallie:
        •        Mortgage Interest: $7,000
        •        Property Taxes: $1,800
        •        Sales Tax: $1,000
        •        State Income Tax: $5,300
While these items total $15,100, Sallie is not permitted to deduct all of these in the same year due to the state and local tax (SALT) deduction limitations.
The SALT deduction, capped at $10,000 under the Tax Cuts and Jobs Act (TCJA), allows Sallie to deduct either “state and local income taxes” or “state and local sales taxes,” but not both. Therefore, her options are:
        1        Mortgage Interest + Property Taxes + Sales Tax $7,000 + $1,800 + $1,000 = $9,800
        2        Mortgage Interest + Property Taxes + State Income Tax $7,000 + $1,800 + $5,300 = $14,100
In both scenarios, Sallie’s total itemized deductions are less than the standard deduction of $14,600 available to Single filers in 2024. As a result, Sallie would be better off claiming the standard deduction instead of itemizing.

In this scenario, Sallie is no longer allowed to claim the standard deduction, even though it would have been more favorable. Filing separately from her husband has resulted in a disadvantage because 26 U.S. Code § 63(c)(6)(A) prohibits one spouse from claiming the standard deduction if the other spouse itemizes deductions.