Question

A single man earned wages of $164,500, received $895 in interest from a savings account, and contributed $13,500 to a tax-deferred savings plan. He has itemized deductions totaling $19,150, which is more than the standard deduction of $18,800 for his filing status.Find the gross income, the adjusted gross income, and the taxable income.

Answer 1

The gross income is $179,895, the adjusted gross income is $160,745, and the taxable income is $141,945.

Step-by-step explanation:

To calculate the gross income, we add up all the sources of income:

• Wages: $164,500
• Interest: $895
• Tax-deferred savings: $13,500

Gross income = $164,500 + $895 + $13,500 = $179,895

To calculate the adjusted gross income, we subtract the itemized deductions from the gross income:

Adjusted gross income = Gross income - Itemized deductions

= $179,895 - $19,150 = $160,745

To calculate the taxable income, we subtract the standard deduction from the adjusted gross income:

Taxable income = Adjusted gross income - Standard deduction

= $160,745 - $18,800 = $141,945