Overview › Area
Deductions & credits
Itemized deductions, gifts of stock and a car, child, education and care credits.
Preparer Priya Raman · due 2026-03-27
Reviewer Daniel Ortiz · due 2026-04-08
Partner Helen Strand
Time 0 of 2.0 h budget
Itemizing (85,706) beats the 31,500 standard deduction.
Taxes: state income tax paid in 2025 27,870 + home real estate tax 13,420, capped at 40,000.
Mortgage interest: the Austin home was bought 07/08 with a Lonestar loan and refinanced with Pecan Federal on 11/20 — 21,847 plus amortized refinance points 9.
Gifts: cash 3,350 (one receipt handwritten and ambiguous), 200 shares to the donor-advised fund 14,500, and the 2012 Subaru 6,000.
Credits: child tax credit / other dependents 400 after phase-out; the American opportunity credit is phased out (0); dependent care benefits of 5,000 leave no Form 2441 credit (0).
Deductions and credits against their limits
| Item | Claimed | Limit |
|---|---|---|
| State and local taxes | 41,290 | 40,000 cap (AGI under 500,000; phase-down not reached) |
| Home acquisition debt | 548,000 → 540,000 | 750,000 limit — fully deductible |
| Cash gifts | 3,350 | 60% of AGI |
| Appreciated stock to DAF | 14,500 | 30% of AGI; held since 2019 (long-term) |
| Donated vehicle | 6,000 | Gross proceeds on Form 1098-C if the charity sells it |
| Child tax credit / ODC | 400 | 2,700 less 50 per 1,000 over 400,000 MAGI (2,300) |
| AOTC (Ada) | 0 | Phased out above 180,000 MAGI |
| Dependent care | 0 | 3,000 for one child, less 5,000 excluded benefits |
Care providers as printed
Bright Oak Preschool · 68-0412257 — 5,400 · Little Sprouts Learning Center · 74-3829516 — 4,200
Checks that don't trust the engine (5)
HOME-RE-TAX · Deductions & credits
Home real estate tax: only the owners' share
Fails
The seller's share is the seller's deduction; ours is 6,508. SALT falls to 34,378 - under the 40,000 cap, so the change now reaches taxable income (federal deduction 40,000 -> 34,378; California itemized -6,912).
Engine 13,420 · recomputed 6,508
How: Travis County bill 13,420 (D58) paid in full by escrow; the buyer closing statement (D54) shows the seller credited 6,912.0 for 01/01-07/07.
Authority: IRC 164(d); Treas. Reg. 1.164-6
SchA.5b
13,420 → 6,508 — Exclude seller-period taxes credited at closing.
Tax: fed +1,462 · CA +332
Tax: fed +1,462 · CA +332
Explain / dismiss instead
MORTGAGE-DUPLICATE · Deductions & credits
Mortgage interest counted once
Fails
Payoff interest 2,150 is inside the Lonestar 1098 box 1 13,900 and was added again. Correct 8a: 13,900 + 997 + purchase points 4,800 = 19,697.
Engine 21,847 · recomputed 19,697
How: Read the lender statements: D55 (1098) says box 1 includes interest paid at payoff; D56 (payoff statement) says its interest is reported on the 1098.
Authority: IRC 163(h)
SchA.8a
21,847 → 19,697 — Payoff interest already on Form 1098.
Tax: fed +559 · CA +103
Tax: fed +559 · CA +103
Explain / dismiss instead
VEHICLE-GIFT · Deductions & credits
Donated car limited to what the charity got
Fails
Charity sold the Subaru for 2,900; deduction is limited to that, not the client's Kelley Blue Book 6,000 (qa-39, call-01). This is item 1 of the 2028 examination.
Engine 6,000 · recomputed 2,900
How: Form 1098-C (D66) box 4a checked (sold at arm's length), 4c gross proceeds.
Authority: IRC 170(f)(12); Form 1098-C box 4c
F8283.A1.vehicle
6,000 → 2,900 — IRC 170(f)(12)(A)(ii): gross proceeds cap.
Tax: fed +806 · CA +149
Tax: fed +806 · CA +149
Explain / dismiss instead
STOCK-GIFT · Deductions & credits
Gift of stock: holding period and limit
Agrees
Held over a year - fair market value 14,500 allowed; well under 30% of AGI. Publicly traded: no qualified appraisal needed.
Engine 14,500 · recomputed 14,500
How: Acknowledgment D65: acquired 04/2019, basis 9,300, value 14,500 (high/low average); AGI 30% limit.
Authority: IRC 170(b)(1)(C), 170(e)(1)
Evidence: D65
· Lines: F8283.A1.stock
CARE-PROVIDER · Deductions & credits
Care provider names and TINs as printed
Fails
F2441.1a.name: Bright Oak Preschool -> Bright Oak Kids Club; F2441.1b.tin: 74-3829516 -> 74-3829156. A wrong provider TIN draws an IRS mismatch notice even with zero credit (benefits exclusion relies on it).
How: Compared Form 2441 provider name and TIN with the printed statements (D61, D62), not the extraction.
Authority: IRC 21(e)(9), 129(e)(9)
F2441.1a.name
Bright Oak Preschool → Bright Oak Kids Club — Provider's legal name as printed on D61.
no tax effect
no tax effect
F2441.1b.tin
74-3829516 → 74-3829156 — Statement D62 prints 74-3829156; pipeline read 74-3829516 (97%).
no tax effect
no tax effect
Explain / dismiss instead
Documents (13)
| D54 | Buyer closing statement - 7709 Barton Ridge Dr (purchase 07/08/2025)
received 2026-02-12 · client · extracted |
evidence for a check Not cited by the engine; used as evidence by HOME-RE-TAX, MORTGAGE-DUPLICATE |
||
| D55 | 2025 Form 1098 - Lonestar Mortgage (home, July-November)
received 2026-02-04 · client · extracted |
landed on the return | SchA.8a | |
| D56 | Lonestar Mortgage payoff statement (11/20/2025)
received 2026-02-04 · client · extracted |
landed on the return | SchA.8a | |
| D57 | 2025 Form 1098 - Pecan Federal Savings (home, refinance)
received 2026-02-04 · client · extracted |
landed on the return | SchA.5b, SchA.8a, SchA.8c | |
| D58 | Travis County 2025 property tax receipt (7709 Barton Ridge Dr)
received 2026-02-12 · client · extracted |
landed on the return | SchA.5b | |
| D59 | 2025 Form 1098-T - University of California, Davis (Ada)
received 2026-02-01 · client · extracted |
landed on the return | F8812.6, F8863.27 | |
| D60 | Scholarship award letter - Ada Lindqvist-Okafor
received 2026-02-01 · client · extracted |
landed on the return | F8863.27 | |
| D61 | Bright Oak Kids Club - 2025 statement (Theo)
received 2026-02-07 · client · extracted |
landed on the return | F2441.1a | |
| D62 | Little Sprouts Learning Center - 2025 statement (Theo)
received 2026-02-07 · client · extracted |
landed on the return | F2441.1b | |
| D63 | Donation receipts (typed) - Sacramento Food Bank, Hill Country Animal Rescue
received 2026-02-10 · client · extracted |
landed on the return | SchA.11 | |
| D64 | Handwritten donation receipt - St. Brigid Parish
received 2026-02-10 · client · extracted |
landed on the return | SchA.11 | |
| D65 | Noncash gift acknowledgment - Austin Community Foundation (stock)
received 2026-02-10 · client · extracted |
landed on the return | F8283.A1.stock | |
| D66 | 2025 Form 1098-C - Lone Star Kids Auto Donation (2012 Subaru Outback)
received 2026-02-10 · client · extracted |
landed on the return | F8283.A1.vehicle |
Every line in this area (35)
Show all 35 lines
| SchA.5a | State income taxes paid in 2025 (CA withholding and payments made in 2025) | 27,870 | |
| SchA.5b | Real estate taxes (home) | 13,420 | |
| SchA.5d | Total state and local taxes | 41,290 | |
| SchA.5e | State and local taxes (limited) | 40,000 | |
| SchA.7 | Total taxes | 40,000 | |
| SchA.8a | Home mortgage interest and points reported on Form 1098 | 21,847 | |
| SchA.8c | Points not reported on Form 1098 (refinance points amortized, 1 of 360 months) | 9 | |
| SchA.8e | Total home mortgage interest | 21,856 | |
| SchA.10 | Total interest | 21,856 | |
| SchA.11 | Gifts by cash or check | 3,350 | |
| F8283.A1.stock | Austin Community Foundation - 200 sh Northlake Total Market Index Fund (acquired 2019-04, cost 9,300) | 14,500 | |
| F8283.A1.vehicle | Lone Star Kids Auto Donation - 2012 Subaru Outback (VIN 4S4BRBCC2C3209921) | 6,000 | |
| SchA.12 | Gifts other than by cash or check | 20,500 | |
| SchA.14 | Total gifts to charity | 23,850 | |
| SchA.17 | Total itemized deductions | 85,706 | |
| F1040.12 | Itemized deductions | 85,706 | |
| F1040.14 | Total deductions | 98,677 | |
| F8812.1 | Modified AGI | 445,590 | |
| F8812.4 | Qualifying children under 17 | 1 | |
| F8812.5 | Line 4 x 2,200 | 2,200 | |
| F8812.6 | Other dependents | 1 | |
| F8812.7 | Line 6 x 500 | 500 | |
| F8812.8 | Add lines 5 and 7 | 2,700 | |
| F8812.11 | Phase-out reduction | 2,300 | |
| F8812.12 | Credit after phase-out | 400 | |
| F8863.27 | Adjusted qualified education expenses (Ada) | 6,800 | |
| F8863.30 | Tentative AOTC | 2,500 | |
| F8863.7 | AOTC after phase-out | 0 | |
| F2441.1a | Care provider: Bright Oak Preschool, tax ID 68-0412257 | 5,400 | |
| F2441.1b | Care provider: Little Sprouts Learning Center, tax ID 74-3829516 | 4,200 | |
| F2441.2 | Qualified expenses - Theo | 9,600 | |
| F2441.12 | Dependent care benefits (W-2 box 10) | 5,000 | |
| F2441.26 | Taxable dependent care benefits | 0 | |
| F2441.31 | Credit for child and dependent care expenses | 0 | |
| F1040.19 | Child tax credit / credit for other dependents | 400 |
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