Question

Jamie Lee Jackson, age 26, is in her last semester of college, and graduation day is just around the corner! It is the time of year again when Jamie Lee must file her annual federal income taxes. Last year, she received an increase in salary from the bakery, which brought her gross monthly earnings to $2,550, and she also opened up an IRA, to which she contributed $300. Her savings accounts earn 2 percent interest per year, and she also received an unexpected $1,000 gift from her great aunt. Jamie was also lucky enough last year to Page 103win a raffle prize of $2,000, most of which was deposited into her regular savings account after paying off her credit card balance.

Current Financial Situation

Assets:

Checking account, $2,250

Savings account, $6,900 (interest earned last year: $125)

Emergency fund savings account, $3,900 (interest earned last year: $75)

IRA balance, $350 ($300 contribution made last year)

Car, $3,000

Liabilities:

Student loan, $10,800

Credit card balance, $0 (interest paid last year: $55)

Income:

Gross monthly salary, $2,550

Monthly Expenses:

Rent obligation, $275

Utilities obligation, $135

Food, $130

Gas/Maintenance, $110

Credit card payment, $0

Savings:

Regular savings monthly deposit, $175

Rainy day savings monthly deposit, $25

Entertainment:

Cake decorating class, $40

Movies with friends, $60

What impact on Jamie Lee’s income will the gift of $1,000 from her great aunt have on her adjusted gross income? Will there be an impact on the adjusted gross income with her $2,000 raffle prize winnings? Explain your answer.

Answer 1

REQUIREMENT

According to the requirement , i have answered the question.

Question) What impact on Jamie Lee’s income will the gift of $1,000 from her great aunt have on her adjusted gross income? Will there be an impact on the adjusted gross income with her $2,000 raffle prize winnings? Explain your answer.

Answer-  

• The limit of tax free gift is higher than the amount of gift received by Jamie Lee, thus this will not have any impact on the adjusted gross income of Jamie Lee.
• The prize winning is taxable income and it will be included to arrive the adjusted gross income.

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