Question

David is a college professor who does some consulting work on the side. He uses 25% of his home exclusively for the consulting practice. He is single and 63 years old. His AGI (without consideration of consulting income) is $45,000.00. Other information follows: Income from consulting business $4000.00 Consulting expenses other than home office $1500.00 Total costs relating to home: Interest and taxes $6500.00 Utilities $1500.00 Maintenance and repairs $ 450.00 Depreciation (business part only) $1500.00 Calculate David

Answer 1

David’s AGI is $44,987.5

Step-by-step explanation:

Adjusted gross income (AGI) is a measure of income calculated from your gross income and used to determine how much of your income is taxable.

Schedule A is an income tax form that U.S. taxpayers use to report their itemized deductions, which can help reduce their federal tax liability.

Calculating David’s AGI:

25% of David's home is exclusively for the consulting practice therefore the Depreciation on schedule A: ($6500+$1500+$450+$1500) *0.25 = $2487.5

David's AGI = $45,000 + ($4000 - $1500 - $2487.5) = $44,987.5