Question

Bianca and Dave are a married couple filing a joint tax return. They have a combined gross income of $81,031 and claim four exemptions. They can make an adjustment of $2,914 for business expenses, an adjustment of $1,939 for business losses, a deduction of $4,140 for medical expenses, an adjustment of $4,825 for contributions to their retirement fund, and a deduction of $2,420 for charitable donations. If exemptions are worth $3,650 apiece and the standard deduction for a joint return is $8,350, what is their total taxable income?
a.
$50,193
b.
$41,843
c.
$48,403
d.
$52,793

Answer 1

Answer: c. $48,403

Work:
- Adjustments: 2,914 + 1,939 + 4,825 = 9,678
- AGI = 81,031 − 9,678 = 71,353
- Itemized deductions (medical + charitable) = 4,140 + 2,420 = 6,560 < standard deduction 8,350, so take standard deduction 8,350
- Exemptions = 4 × 3,650 = 14,600
- Taxable income = 71,353 − 8,350 − 14,600 = 48,403