Question

Ryan is not married and supports her 12 year old child who lives with her. Ryan works as an employee with gross salaries and wages of $122,000. Ryan only other income was interest of $7,300, qualifying dividends of $3,150, and other information follows:

Contribution to solo(k) retirement plan, withheld from the salary             $ 4,500

Loss on sale of Alphatech stock held 2 years                                                   -3,700

Mortgage interest on primary residence                                                           4,950

State and local property tax on residence                                                          3,350

Property tax included in personal auto registration                                           160

State sales taxes paid                                                                                              370

State income taxes paid                                                                                       1,800

Charitable contributions of cash                                                                         1,750

Political contributions                                                                                            550

All information is for 2020.

Calculate adjusted gross income, taxable income, and gross tax.

Answer 1

Adjusted gross income:

gross salary and wages - $ 1,22,000

Add: Interest - $ 7,300

Gross income = $ 1,29,300

less: contribution to retirement

Plan with held from salary - $ 4,500

Adjusted gross income =$ 1,24,800

taxable income:

  Adjusted gross income -$ 1,24,800

less: deductions   

Mortgage interest on primary residence 4,950   

State and local property tax on residence 3350

State sales taxes paid 370

State income tax paid 1800

charitable contribution paid     1750      

Political contribution 550
Total -12,770

Taxable income = 1,12,030

Gross tax =. 5,520

adjusted gross income = 1,24,800

taxable income=1,12,030

gross tax=5,520