Chapter 18.III, Problem 8RE

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

Chapter
Section

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# As a tax return preparer for The Fernando Rodriguez Tax & Accounting Service, you have been asked to calculate the missing information for eight of the firm's tax clients. Use the standard deductions listed on page 613.(circle your choice) Filing Status Adjustments to Adjusted Gross Standard Itemized Exemption Taxable Name (Exemptions) Income Income Income Deduction Deductions Allowances Income 8 Mervis Married filing jointly (4) $37,550$8,400

To determine

To calculate: The total income, standard deduction, exemption allowances and taxable income if Mervis had filed as married jointly tax return with the adjustments to income of $696 and adjusted gross income of$37,550 and itemized deductions of $8,400. Explanation Given Information: Mervis had filed as married jointly tax return with the adjustments to income of$696 and adjusted gross income of $37,550 and itemized deductions of$8,400.

Formula used:

The formulas used for calculation are listed below,

Calculation:

Taxable income is defined as the income to which tax rates are functional in order to discover the total amount of tax payable for the year. The followings steps are used to calculate

Step 1: The total income is calculated as done below,

Total Income = Adjustments to income + Adjusted Gross Income = $696 +$37,550 =$38,246 Step 2: The standard deductions for married jointly filing will be$12,400 which can be seen from the standard deduction table.

Step 3: None of the conditions are given for high income return so the exemption allowances are calculated as done below,

Exemption Allowances=$3,950×number of exemptions claimed=$3,950×4= $15,800 Step 4: Now, as the deduction to claim,$12,400 is more than the itemized deductions, \$8,400 then the standard deductions are taken into account for the calculation of taxable income

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