Question

Mike has an adjusted gross income of $85,643. He claims two exemptions and can deduct $896 for state income tax, $2,145 for charitable donations, and $3,473 for medical expenses. If the standard deduction is $5,700 and exemptions are each worth $3,650, what is Mike’s total taxable income?
a.
$72,643
b.
$75,479
c.
$71,829
d.
$66,129

Answer 1

First compute itemized deductions: 896 + 2,145 + 3,473 = 6,514 (greater than the standard deduction of 5,700, so use itemized).

Personal exemptions: 2 × 3,650 = 7,300.

Taxable income = 85,643 − 6,514 − 7,300 = 71,829.

Answer: c. $71,829