Question

) You and your spouse have earned salary and wages of $41,750. In addition you have municipal bond interest income of $600 and savings account and certificate of deposit interest income of $800. You paid a total of $600 in interest on your student loan. Using only this information, what is your adjusted gross income for tax purposes? A) $43,150 B) $42,550 C) $42,350 D) $41,950

Answer 1

Answer: B. $42,550

Step-by-step explanation:

GIVEN THE FOLLOWING ;

Earnings:

Salary and wages = $41,750

Income from Municipal bond interest = $600

Savings account and certificate of deposit interest income = $800

ADJUSTMENT:

Interest on student loan = $600

All income realized from the earnings above, (Salary and wages,Municipal bond interest, savings account and certificate of deposit interest) all make up the individual's gross income.

However, taxable income of an individual isn't the individual's gross income.

Some adjustments or deductions (such as interest the individual has to pay on LOANS) are made to the Gross income before it becomes taxable. The taxable portion of an individual's gross income is called the ADJUSTABLE GROSS INCOME.

Therefore,

$(41,750 + 600 + 800 - 600) = $42,550

Answer 2

The answer is option D. $41,950

Step-by-step explanation:

The adjusted gross income for tax purpose is D. $41,950