Question

You have a gross income of $117,151 and are filing your tax return singly. You claim one exemption and can take a deduction of $2,713 for interest on your mortgage, an adjustment of $2,791 for business losses, an adjustment of $1,346 for alimony, a deduction of $2,086 for property taxes, a deduction of $2,376 for contributions to charity, and an adjustment of $1,091 for contributions to your retirement fund. The standard deduction for a single filer is $5,700, and exemptions are each worth $3,650. What is the difference between your adjusted gross income and your taxable income?
a.
$16,053
b.
$9,350
c.
$10,825
d.
$14,475


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C

Adjustments: 2,791 + 1,346 + 1,091 = 5,228, so AGI = 117,151 − 5,228 = 111,923.
Itemized deductions: 2,713 + 2,086 + 2,376 = 7,175 (itemize since > standard).
Taxable income = 111,923 − 7,175 − 3,650 = 101,098.
Difference = 111,923 − 101,098 = 10,825 → choice C.