Sabrina is a college professor in Houston, Texas who earns a salary of $95,000. She is single, just put down $25,000 on a new townhouse, and has no children. Explain if Sabrina has any way of reducing her payroll taxes or her personal income tax

What will be an ideal response?

Sabrina has no way of reducing payroll taxes (Social Security tax and Medicare tax) unless she takes a cut in salary. She can reduce her personal income tax by claiming her $3,950 personal exemption, she can deduct her mortgage interest from the mortgage she pays on her new townhouse, she can donate to charity and claim those donations as deductions, and she can deduct any contributions she may be able to make to a pension or retirement plan.