Question

5. M, age 67, is single with one familial dependent and has the following for the calendar year 2019:

RECEIPTS FOR YEAR

   Salary as Business Consultant (part-time) $ 44,200

   Interest from Friendly Bank     5,436

   Interest from City of Chula Vista bonds     2,000

   Social Security benefits     29,000

EXPENDITURES FOR YEAR

   Contribution to IRA 3,920

   Itemized deductions 19,600

Jessica claims one $500 dependency credit.

How much are Jessica’s adjusted gross income, taxable income and gross tax? Show your work!

   AGI = $______________     Taxable Income = $______________     Gross tax $______________

Answer 1

Ans:

1. Gross Income= Salary + Interest from bank+Interest from City of Chula Vista bonds + 50% of social Security Benefits

=> 44,200+5,436+2,000+50% of 29,000

=> 49,436+2000+14,500

=> 65,936

Adjusted Gross Income= Gross Income- Dependency Credit-Itemized Deduction- IRA Contribution

=> 65,936-500-19,600-3,920

=> 41,916

2. Since M claims Itemized deduction already and not be Deducting Standard Deduction therefore His Adjusted Gross income will be Equal to Taxable Income, therefore Taxable Income will be 41,916

3. Gross Tax or Tax liability => 10% of 13,850+12% of {31,916-13,850}

=> 1,385+ 2,167.92

=> 3,552.92