Kelsey is a cash-basis, calendar-year taxpayer. Her salary is $30,000, and she is single. She plans to purchase a residence in 2015. She anticipates her property taxes and interest will total $8,000 in 2015. Each year, Kelsey contributes approximately $1,500 to charity. Her other itemized deductions total $2,000. For purposes of this problem, assume 2015 tax rates, exemptions, and standard deductions are the same as 2014.
a. What will her gross tax be in 2014 and 2015 if she contributes $1,500 to charity in each year?
b. What will her gross tax be in 2014 and 2015 if she contributes $3,000 to charity in 2014 but makes no contribution in 2015?
c. What will her gross tax be in 2014 and 2015 if she makes no contribution in 2014 but contributes $3,000 to charity in 2015?
d. Why does alternative "c" yield the lowest tax?