Question

# 1) The Inouyes filed jointly in 2018. Their AGI is \$78,000. They reported \$2,000 of qualified...

1) The Inouyes filed jointly in 2018. Their AGI is \$78,000. They reported \$2,000 of qualified business income and \$22,000 of itemized deductions. They have two children, one of whom qualifies as their dependent as a qualifying child. The 2018 standard deduction amount for MFJ taxpayers is \$24,000. What is the total amount of from AGI deductions they are allowed to claim on their 2018 tax return? Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund.

2) Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2018, Ed and Jane realized the following items of income and expense:

 Item Amount Ed's Salary \$ 35,000 Jane's Salary 70,000 Municipal bond interest income 400 Qualified business income 1,000 Alimony paid (for AGI deduction) (7,000 ) Real property tax (from AGI deduction) (10,000 ) Charitable contributions (from AGI) (15,000 )

They also qualified for a \$2,000 child tax credit. Their employers withheld \$5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2018 standard deduction amount for MFJ taxpayers is \$24,000.

What is the couple's taxable income?

Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund.; 04-02 Explain the requirements for determining who qualifies as a taxpayer's dependent.; 04-03 Determine a taxpayer's filing status.

1. Total amount from AGI deduction shall be greater of itemized deduction or standard deduction. In the given case, Itemized deductions are \$22000 and standard deduction is \$24000. Moreover in the year 2018, there is no dependency and personal exemption from the AGI.

Therefore, the total amount of AGI deductions= \$24000

2.The couple's taxable income is as follows:-

 Particulars Amount Ed's Salary 35,000 Jane's Salary 70,000 Municipal bond interest income 0 Qualified business income 1,000 GROSS INCOME 1,06,000 Less:- Alimony Paid (7000) ADJUSTED GROSS INCOME 99,000 Standard deduction- 24000 Itemized deduction- 25000 LESS:- Greater of standard or itemized deduction (25000) TAXABLE INCOME 74,000

#### Earn Coins

Coins can be redeemed for fabulous gifts.