Question

This year Diane intends to file a married-joint return. Diane received $181,100 of salary and paid $6,550 of interest on loans used to pay qualified tuition costs for her dependent daughter. Deb. This year Diane has also paid moving expenses of $8,950 and $30,100 of alimony to her ex-spouse, Jack, who she divorced in 2012. Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. a. What is Diane's adjusted gross income? This year Diane intends to file a married-joint retum. Diane recelved $181,100 of salary and paid $6.550 of interest on loans used to pay qualified tuition costs for her dependent daughter, Deb. This year Diane has also paid moving expenses of $8,950 and $30,100 of alimony to her ex-spouse, Jack, who she divorced in 2012 Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. b. Suppose that Diane aiso reported income of $10,500 from a half share of profits from a partnership. Disregard any potential selfemployment taxes on this income What AGl would Diane report undet these circumstances?

Answer 1

Diane's adjusted gross income (AGI) would be $144,450 without the partnership income, and with the partnership income, it would be $154,950. Moving expenses are not deductible unless she is a member of the Armed Forces, and alimony paid is deductible since the divorce occurred before 2019.

Step-by-step explanation:

Calculation of Adjusted Gross Income (AGI)

To calculate Diane's adjusted gross income, we start with her salary and make adjustments based on the tax rules and information provided. The AGI is crucial as it affects tax liability and eligibility for certain tax credits and deductions.

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• Salary: $181,100
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• Interest on loans for tuition (Allowed as a deduction up to a certain limit): -$6,550
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• Moving expenses: Not deductible as per tax changes post-2017 (except for members of the Armed Forces)
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• Alimony paid (for divorces finalized before 2019): -$30,100
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• Partnership income: +$10,500

Based on this, Diane's AGI would be initially calculated as:

$181,100 (Salary) - $6,550 (Interest on tuition loans) - $30,100 (Alimony paid) = $144,450

If we also include the income from the partnership, her AGI would be:

$144,450 + $10,500 (Partnership income) = $154,950

Note that the moving expenses are not deductible for the tax year in question, unless Diane is a member of the Armed Forces. Therefore, in calculating AGI, the moving expenses are not subtracted. Also, alimony payments are deductible if the divorce was finalized before 2019.

Answer 2

If Diane also reported income of $10,500 from a half share of profits from a partnership, her adjusted gross income (AGI) would be $191,600

How to solve

a. To determine Diane's adjusted gross income (AGI), follow these steps:

Start with Diane's gross income: Gross income = Salary + Interest on qualified tuition loans = $181,100 + $6,550 = $187,650

Subtract qualified tuition loan interest deduction: Adjusted gross income (AGI) = Gross income - Qualified tuition loan interest deduction = $187,650 - $6,550 = $181,100

b. If Diane also reported income of $10,500 from a half share of profits from a partnership, her adjusted gross income (AGI) would be:

Adjusted gross income (AGI) = Gross income - Qualified tuition loan interest deduction + Partnership income = $187,650 - $6,550 + $10,500 = $191,600