Question

Compute 2018 taxable income in each of the following independent situations.

a. Drew and Meg, ages 40 and 41, respectively, are married and file a joint return. In addition to four dependent children, they have AGI of $125,000 and itemized deductions of $27,000.
b. Sybil, age 40, is single and supports her dependent parents, who live with her. Sybil also supports her grandfather, who lives in a nursing home. She has AGI of $80,000 and itemized deductions of $8,000.
c. Scott, age 49, is a surviving spouse. His household includes two unmarried stepsons who qualify as his dependents. He has AGI of $75,000 and itemized deductions of $10,100.
d. Amelia, age 33, is an abandoned spouse and maintains a household for her three dependent children. She has AGI of $58,000 and itemized deductions of $10,650.
e. Dale, age 42, is divorced but maintains the home in which he and his daughter, Jill, live. Jill is single and qualifies as Dale’s dependent. Dale has AGI of $64,000 and itemized deductions of $9,900.

Answer 1

a. Drew and Meg are married and filing a married joint return. The standard deduction of a married joint return is $24,400 but it is lower

AGI $125,000

Less: Itemized deduction $27,000

Taxable income $98,000

b. Sybil's filing status is head of household. The Standard deduction for head of household is $18,000 in 2018 which is higher than itemized deductions of $8,000.

AGI $80,000

Less: Itemized deduction $18,000

Taxable income $62,000

c. Scott is a surviving spouse. The standard deduction will be equal to that of married filling joint return which is $24,400

AGI $75,000

Less: Itemized deduction $24,400

Taxable income $50,600

d. Amelia is an abandoned spouse. She can file as head of household. The standard deduction for the year 2018 is $18,000 which is higher than itemized deductions of $10,650.

AGI $58,000

Less: Itemized deduction $18,000

Taxable income $40,000

e. Dale is divorced and filing status is head of household. The standard deduction for the year 2018 is $18,000 which is higher than itemized deductions of $9,900

AGI $64,000

Less: Itemized deduction $18,000

Taxable income $46,000