Question

Compute the taxable income for 2017 under each of the following circumstances:

A) Jim is married and files a joint return. Jim and his wife have two dependent children. They have adjusted gross income of $30,000 and itemized deductions of $12,400.
B) Jim is single with no dependents. His adjusted gross income $20,000 with itemized deductions of $3,800.
C) Jim is a full-time college student under 24 supported by his father. Jim earned $2,600 from a part-time job and had $500 of interest income. His itemized deductions were $600.
D) Jim is married but files separately and claims two dependent children. His adjusted gross income is $65,000 and he $8,900 of itemized deductions. Jim's wife also itemizes on her return.
E) Assume the same situation as in (d), but Jim's itemized deductions are $1,500.

Answer 1

To compute the taxable income for each scenario in 2017, you need to subtract the applicable deductions from the adjusted gross income. Scenario A has a taxable income of $17,600, scenario B has $16,200, scenario C has $2,500, scenario D has $56,100, and scenario E has $63,500.

Step-by-step explanation:

Compute the Taxable Income for 2017

1. For scenario A, Jim is married and files a joint return. Their adjusted gross income is $30,000 and they have itemized deductions of $12,400. To calculate their taxable income, subtract the deductions ($12,400) from the adjusted gross income ($30,000), resulting in a taxable income of $17,600.
2. For scenario B, Jim is single with no dependents. His adjusted gross income is $20,000 and he has itemized deductions of $3,800. Subtracting the deductions ($3,800) from the adjusted gross income ($20,000), Jim's taxable income is $16,200.
3. For scenario C, Jim is a full-time college student supported by his father. Jim earned $2,600 from a part-time job and had $500 of interest income. His itemized deductions are $600. Jim's taxable income is calculated by adding his earnings ($2,600) and interest income ($500) and then subtracting the deductions ($600), resulting in a taxable income of $2,500.
4. For scenario D, Jim is married but files separately and claims two dependent children. His adjusted gross income is $65,000 and his itemized deductions are $8,900. Jim's wife also itemizes on her return. To calculate Jim's taxable income, subtract his deductions ($8,900) from his adjusted gross income ($65,000), resulting in a taxable income of $56,100.
5. For scenario E, where Jim's itemized deductions are $1,500, we can follow the same process as scenario D to calculate his taxable income. Subtract the deductions ($1,500) from the adjusted gross income ($65,000) to get a taxable income of $63,500.