Question

Jane (age 29) is a single taxpayer. In 2018, her salary is $39,000, and she has dividend income of $1,000. In addition, she has deductions for AGI of $2,500 and $3,000 of itemized deductions. Calculate the following amounts:

a) Gross income: $40,000
b) Deductions for AGI: $2,500
c) Adjusted gross income: $37,500
d) Greater of the standard deduction or itemized deductions: $12,200
e) Taxable income: $25,300

Answer 1

Jane's Gross Income is $40,000, Deductions for AGI is $2,500, Adjusted Gross Income is $37,500, the Greater of the Standard Deduction or Itemized Deductions is $12,200, and the Taxable Income is $25,300.

Step-by-step explanation:

To calculate the Gross Income, we add the salary and dividend income: $39,000 + $1,000 = $40,000.

The Deductions for AGI are given as $2,500.

The Adjusted Gross Income is calculated by subtracting the Deductions for AGI from the Gross Income: $40,000 - $2,500 = $37,500.

The Greater of the Standard Deduction or Itemized Deductions can be found by comparing the two amounts: $12,200.

The Taxable Income is obtained by subtracting the Greater of the Standard Deduction or Itemized Deductions from the Adjusted Gross Income: $37,500 - $12,200 = $25,300.