Chapter 18, Problem 20AT

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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 |
||||||||

20. |
Chong | Head of household (4) | $38,100 | $35,650 | $5,930 |

To determine

**To calculate:** The adjustments to income, standard deduction, exemption allowance and taxable income of Chong who is head of household and claiming four exemptions. He is earning $38,100 per year and adjustment gross income is $35,650 and his itemized deductions are $5,930.

Explanation

**Given Information:**

The total earning of Chong is $38,100 per year and he is claiming four exemption. Adjustment gross income is given as $35,650 and itemized deduction is $5,930.

**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 Chong is $38,100 per year and there is no other source of income for him

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