Final answer:
John's Federal Taxable Income is obtained by subtracting adjustments to income, itemized deductions, and exemptions from his gross income. When calculated according to the data provided, the taxable income would be $40,360, which doesn't match the provided options and suggests there may be an error in the choices or information given.
Step-by-step explanation:
To calculate John's Federal Taxable Income, we must subtract the adjustments to income, itemized deductions, and exemptions from his gross income. Starting with John's gross income of $75,671, we first subtract the adjustments to income of $7,500 for an approved retirement plan. This gives us the adjusted gross income (AGI). Next, we subtract the itemized deductions of $17,311 from the AGI. Lastly, we subtract the total of the exemptions, which is 3 exemptions at $3,500 each, equating to $10,500 in total.
The formula we use is:
taxable income = adjusted gross income - (deductions and exemptions)
Following the formula:
- Adjusted gross income = $75,671 - $7,500 = $68,171
- Total exemptions = 3 exemptions * $3,500 per exemption = $10,500
- Federal Taxable Income = $68,171 - $17,311 - $10,500 = $40,360
Since the option $40,360 is not listed amongst the choices provided, and all of the other options are incorrect, there may be an error in the options or a typo in the provided values.