Question

Ross Martin arrived at the following tax information: Tax Information Gross salary $ 57,305 Interest earnings...

Ross Martin arrived at the following tax information:

Tax Information
Gross salary $ 57,305
Interest earnings 245
Dividend income 145
Standard deduction 12,000
Itemized deductions 11,330
Adjustments to income 1,600

What amount would Ross report as taxable income?

Please spell out calculations

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Answer #1

Answer:

Gross Salary, Interest earnings, Dividend Income and Adjustments to Income all form part of taxable income.

A taxpayer can claim a deduction of either Standard Deduction or Itemized deduction. In the given case since Standard

Deduction amounting to $12000 is greater than Itemized deduction amounting to $11330, the taxpayer will claim Standard Deduction.

Net taxable income = $57305 + $245 + $145 -  $1600 - $12000

Net taxable income= $44095

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