Question & Answer: Jason and Mary are married taxpayers in 2016. They are both under age 65 and in good health. For this tax year, the…..

Jason and Mary are married taxpayers in 2016. They are both under age 65 and in good health. For this tax year, they have a total of \$41,000 in wages and \$700 in interest income. Jason and Mary’s deductions for adjusted gross income amount to \$5,000 and their itemized deductions equal \$7,950. They claim two exemptions for the year on their joint tax return. a. What is the amount of Jason and Mary’s adjusted gross income? \$___________ b. What is the amount of their itemized deductions or standard deduction? \$______________ c. What is their 2016 taxable income? \$________________

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Question & Answer: Jason and Mary are married taxpayers in 2016. They are both under age 65 and in good health. For this tax year, the…..
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1. What is the amount of Jason and Mary’s adjusted gross income?

Calculation of AGI:

Total Income      = Wages + Interest

= \$41,000 + \$700

Total Income                      = \$41,700

AGI        = Total Income – Deduction for AGI

= \$41,700 – \$5,000

AGI        = \$36,700

Jason and Mary’s adjusted gross income = \$36,700

1. What is the amount of their itemized deductions or standard deduction?

Itemized Deduction = \$7,950 or

Standard Deduction for 2016 = \$12,600

Note: While the itemized deductions are \$7,950, that’s less than their standard deduction of \$12,600, so they should use the standard deduction.

1. What is their 2016 taxable income?