Question

Jim and Breena are Married Filing Jointly. In 2018, they contributed $10,000 to their traditional IRAs. They also put $2,000 into Jim's company's HSA. They paid $12,000 in home mortgage interest and also paid $8,000 in state and local taxes. They had total income of $75,000 in 2018. Compute their Adjusted Gross Income (AGI).

Group of answer choices

$75,000

$39,000

$43,000

$63,000

Answer 1

Contribution to traditional IRAs deduction is allowed in full if they are married and aren’t covered by a retirement plan at work.

The maximum contributions to a health savings account for 2018 is $6,850 for families, hence $2,000 is an allowable deduction

The interest paid personally, is only entitled for deduction , i.e $12,000

Deduction for state and local taxes are limited to $10,000, hence $8,000 is an allowable deduction

AGI = $(75,000 - 10,000 - 2000 - 12,000 - 8000) = $ 43,000

Correct Option is $43,000