Question

Jamison Mitchell (43) is an unmarried, head of household taxpayer with the following income for the year: Wages $40,215; Bank interest $170; Municipal bond interest $195; Lottery prize $475; Gift from his father $14,000. Jamison contributed $3,150 to his traditional IRA, which he will deduct. What is Jamison's adjusted gross income?

Answer 1

Step-by-step explanation:

Adjusted Gross Income of an individual is the calculation of all an individuals earnings less authorised deductions.

Jamison Mitchell's Adjusted Gross Income is calculated thus:

1. Wages $40,215

2. Bank Interest $170

3. Lottery Prize $475

4. Municipal Bond Interest $195

Total Income $41,055

Less: Contribution to IRA ($3,150)

Adjusted Gross Income $37,905

Please Note that Cash gift from either a father or Mother to their Child to the tune of $14,000 each is not classified as an income and so not taxable.