Question

Donald is a Single filer. In 2018, he had a total of $78,000 in income. Donald contributed $5,500 to his traditional IRA and another $5,000 to his company 401(k) plan. Donald qualifies for the following deductions (if he were to itemize): Home mortgage interest of $6,000; state and local taxes of $3,500; and charitable contributions of $1,500. Compute Donald's taxable income for 2018.

Group of answer choices

$55,500

$56,500

$44,500

$67,500

Answer 1

A statement Showing Calculation of Taxable Income of Donald for year 2018
Particulars	Amount	Amount
Gross Income (A)		$78,000
Less
1) Contribution to traditional IRA	$5,500
2) Contribution to company Plan	$5,000
3) Deduction for interest on Home mortage	$6,000
4) State and Local Tax	$3,500
5) Charitable Contribution	$1,500
Total deduction(B) (addition of 1 to 5)	(addition of 1 to 5)	$21,500
Taxable income{A/B]		$56,500
Taxable income of donald for the year 2018 is $ 56,500