Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2019, Ed and Jane realized the following items of income and expense: Amount Items:

$35,000 Ed's Salary, $70,000 Jane's Salary, $400 Municipal bond interest income, $1,000 Qualified business income, $7,000 Alimony paid (for AGI deduction), $10,000 Real property tax (from AGI deduction) $15,000) Charitable contributions (from AGI).

They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2019 standard deduction amount for MFJ taxpayers is $24,400.

Required:

1. What is their AGI?

2. What is their Taxable income?

Question

Roland Dalton

Business

2 June, 18:14

Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2019, Ed and Jane realized the following items of income and expense: Amount Items:

$35,000 Ed's Salary, $70,000 Jane's Salary, $400 Municipal bond interest income, $1,000 Qualified business income, $7,000 Alimony paid (for AGI deduction), $10,000 Real property tax (from AGI deduction) $15,000) Charitable contributions (from AGI).

They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2019 standard deduction amount for MFJ taxpayers is $24,400.

Required:

1. What is their AGI?

2. What is their Taxable income?

+4

Answers (1)

Know the Answer?

Araceli Kramer · Answer 1

1) AGI = $112,400

2) Taxable Income = $80,600

Explanation:

Ed's Salary = $35,000

Jane's Salary = $70,000

Municipal bond interest income = $400

Qualified business income = $1,000

Alimony paid (for AGI deduction) = $7,000

Real property tax (from AGI deduction) = $10,000

Charitable contributions (from AGI) = $15,000

The total gross income for Jane and Ed = $70,000 + $35,000 = $105,000

1) Their AGI (Adjusted Gross Income) = $105,000 + $400 + $7,000 = $112,400

2) Their taxable income = $112,400 - $24400 - $7000 - $400 = $80,600