Question

Simpson, age 45, is a single individual who is employed full time by Duff Corporation. This year Simpson reports AGI of $67,200 and has incurred the following medical expenses:

Answer 1

To calculate Simpson's deduction, subtract the appropriate amount from his AGI based on the income range. Then, subtract the deduction from the AGI to find the taxable income. Medical expenses do not affect this calculation.

Step-by-step explanation:

Simpson's AGI is $67,200. To calculate the deduction, we need to subtract the appropriate amount for the given income range. First, we find the income range from the table provided. Based on the table, Simpson's income falls in the range $50,000 to $75,000. The deduction for this range is $7,500 plus 25% of the amount over $50,000. So, the deduction for Simpson will be $7,500 + (25% * ($67,200 - $50,000)).

Next, we need to calculate the taxable income. It is obtained by subtracting the deduction from the AGI. In this case, the taxable income would be $67,200 - (7,500 + (25% * ($67,200 - $50,000))).

The medical expenses are not relevant to the calculation of deductions and taxes, so they do not affect the answer to this question.