Chapter 18, Problem 18AT

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Calculate the missing Information for the following taxpayers.

Filing Status |
Adjustment |
Adjusted Gross |
(circle your choice) Standard Itemized |
Exemption |
Taxable |
|||||||||||

Name |
(Exemptions) |
Income to Income |
Income |
Deduction Deductions |
Allowance |
Income |
||||||||||

18. |
Huskey | Single (1) | $34.900 | $660 | $6,520 |

To determine

**To calculate:** The adjusted gross income, standard deduction, exemption allowance and taxable income of Huskey who is single (unmarried) and claiming one exemption. He is earning $34,900 per year and adjustment to income is $660 and his itemized deductions is $6,520.

Explanation

**Given Information:**

The total earning of Huskey is $34,900 per year and he is claiming one exemption. Adjustment to income is given as $660 and itemized deduction is $6,520.

**Formula used:**

Procedure to calculate taxable income for individuals is given below.

Step 1: Find total income by adding all sources of taxable income.

Step 2: Calculate adjusted gross income by subtracting the sum of all adjustments to income from total income.

Step 3: From the adjusted gross income subtract the sum of the itemized deductions or the standard deduction (whichever is larger).

Step 4: Multiply $3,950 by the total number of exemptions claimed and subtract from the outcome of step 3 and this result is called taxable income.

**Calculation:**

Step 1: Total income of Huskey is given as $34,900 and there is no other source of income for him.

Step 2: Adjusted gross income is calculated in the following way:

Adjustment to income is given as $660.

Step 3: From the adjusted gross income subtract the sum of the itemized deductions or the standard deduction (whichever is larger)

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