   Chapter 18.III, Problem 9RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

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

# Nancy Sullivan sells wholesale school supplies for Sharpie Corporation. She is single, claiming three exemptions. For income tax purposes, she qualifies as a head of household. Last year she earned a total of $54,300 in salary and commission. She contributed$2,500 to her retirement plan and had the following itemized deductions: $1,231 in real estate taxes.$3,450 in mortgage interest. $2,000 in mortgage loan closing points.$420 in charitable contributions, and $3,392 in unreimbursed job expenses above the 2% adjusted gross income exclusion. From this information. calculate Nancy's taxable income. To determine To calculate: The taxable income of person N, who is single and claims the three exemptions. She earned$54,300 in salary out of which $2,500 is contributed to retirement plan with the real estate taxes of$1,231 and mortgage interest of $3,450 and mortgage loan closing points of$2,000 and charitable contribution of $420 with job expenses of$3,392 with over adjusted gross income of 2%.

Explanation

Given Information:

Person N is single and claims the three exemptions. She earned $54,300 in salary out of which$2,500 is contributed to retirement plan with the real estate taxes of $1,231 and mortgage interest of$3,450 and mortgage loan closing points of $2,000 and charitable contribution of$420 with job expenses of $3,392 with over adjusted gross income of 2%. Formula used: The formulas used to calculate total income are listed below: Total Income=Adjustments to income+Adjusted Gross Income And, Taxable Income=Adjusted Gross Incomeitemized deductionsexemptions allowances 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 as done below: Step 1: The total income is given to be$54,300

Step 2: It is needed to calculate the adjusted gross income which can be seen as done below:

Total Income=deductions from total income+Adjusted Gross Income$54,300 =$2,500+Adjusted Gross IncomeAdjusted Gross Income = $51,800 Step 2: The standard deductions for single will be$6,200 which can be seen from the standard deduction table

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