Question

A woman earned wages of ​$42500, received ​$2800 in interest from a savings​ account, and contributed ​$3200 to a​ tax-deferred retirement plan. She was entitled to a personal exemption of ​$4050 and had deductions totaling ​$6540. Find her gross​ income, adjusted gross​ income, and taxable income.

Answer 1

1. wages + other earnings = gross income

42500 + 2800 = 45300

2. gross income - any tax-deferred = adjusted gross income

45300 - 3200 = 42100

3. adjusted gross income - exemptions & deductions = taxable income

42100 - 4050 - 6540 = 31510

Explanation: