Question

John had the salary of $40,000 and Alice has Salary of $28,000. They have no children....

John had the salary of $40,000 and Alice has Salary of $28,000. They have no children. They paid state income taxes of $6,200, sales tax of $400, federal taxes of $1,700. In addition, they contributed $16,000 to their church and paid $4,000 interest on their home mortgage.

Compute John and Alice's taxable income for tax year 2020

(please include notes/formulas)

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Answer #1

ANSWER:

Bill - Salary - $ 40,000 Alice - Salary - $ 28,000

Calculation of itemized deductions for tax year 2020 State Income Taxes     =   $ 6,200 Sales Tax = $ 400 Property Taxes    = $ 1,700 Total $ 8,300

+Interest on mortage on home = $ 16000 $ 24,300

NOTES: 1) State and local taxes or sales tax , including property taxes (up to the total of $ 10,000).

Standard deduction as per IRS FOR Year 2020 for married tax payers filing jointly = $ 24,800

The deduction is higher in standard deduction as compared to itemized deduction.

The tax payer should choose standard deduction for the benifit i.e. $ 24,800.

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