# Problem 3 24 lo 1 compute 2018 taxable income in each

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Problem 3-24 (LO. 1) Compute 2018 taxable income in each of the following independent situations. Click here to access the standard deduction table to use if required. a. Drew and Meg, ages 40 and 41, respectively, are married and file a joint return. In addition to four dependent children, they have AGI of \$125,000 and itemized deductions of \$27,000.
b. Sybil, age 40, is single and supports her dependent parents, who live with her. Sybil also supports her grandfather, who lives in a nursing home. She has AGI of \$80,000 and itemized deductions of \$8,000.
c. Scott, age 49, is a surviving spouse. His household includes two unmarried stepsons who qualify as his dependents. He has AGI of \$75,000 and itemized deductions of \$10,100.
d. Amelia, age 33, is an abandoned spouse and maintains a household for her three dependent children. She has AGI of \$58,000 and itemized deductions of \$10,650.
e. Dale, age 42, is divorced but maintains the home in which he and his daughter, Jill, live. Jill is single and qualifies as Dale's dependent. Dale has AGI of \$64,000 and itemized deductions of \$9,900. AGI \$64,000 Less: standard deduction Taxable income \$ Feedback As a general rule, personal expenditures are disallowed as deductions in arriving at taxable income. However, Congress allows specified personal expenses as itemized deductions. Such expenditures include medical expenses, certain taxes and interest, and charitable contributions. In lieu of claiming itemized deductions, taxpayers can use the standard deduction. The standard deduction is the sum of two components: the basic standard deduction and the additional standard deduction. Answers: itemized deductions; \$27,000; \$98,000; standard deduction; \$18,000; \$62,000; standard deduction; \$24,000; \$51,000; standard deduction; \$18,000; \$40,000; standard deduction; \$18,000; \$46,000. Deductions from AGI to arrive at taxable income include the standard deduction or itemized deductions. The standard deduction is the sum of two components: the basic standard deduction and the additional standard deduction. A taxpayer who is age 65 or over or blind qualifies for an additional standard deduction of \$1,300 or \$1,600, depending on filing status. Two additional standard deductions are allowed for a taxpayer who is age 65 or over and blind. The additional standard deduction provisions also apply for a qualifying spouse who is age 65 or over or blind. To determine whether to itemize, the taxpayer compares the total standard deduction (the sum of the basic standard deduction and any additional standard deductions) with total itemized deductions. Taxpayers are allowed to deduct the greater of itemized deductions or the standard deduction. The choice is elective each year. a. AGI \$125,000 Less: itemized deductions (27,000) Taxable income \$98,000 b.