Jason and Mary are married taxpayers in 2019. They are both under age 65 and in good health. For 2019 they have a total of $98,900 in wages and $645 in interest income. Jason and Mary's deductions for adjusted gross income amount to $2,540 and their itemized deductions equal $8,440. They claim two exemptions for the year on their joint tax return.

Filing Status 2017 Standard Deduction
Single $6,350
Married, filing jointly 12,700
Married, filing separately 6,350
Head of household 9,350
Qualifying widow(er) 12,700

a. What is the amount of Jason and Mary's adjusted gross income?
b. In order to minimize taxable income, Jason and Mary will take the standard deduction in the amount of:
c. What is their taxable income?

a) $97,005

b) $12,700

c) $76,205

Explanation:

a) Adjusted income can be calculated using the following formula,

= Wages + Interest income - deductions.

Calculating therefore would give us,

= 98,900 + 645 - 2,540

= $97,005

$97,005 is their adjusted gross income.

b) Jason and Mary will take the standard deduction in the amount of $12,700 as they are filling jointly and this figure is higher than their itemized deductions.

c) The formula for calculating their taxable income is,

Taxable income = Adjusted Gross Income - Standard deduction - Personal exemption

It is worthy of note that their Personal exemption amount to $4,050 each.

Calculating therefore will give us,

Taxable income = 97,005 - 12,700 - (4,050 * 2)

Taxable Income = $76,205

Their Taxable income is $76,205

If you need any clarification do comment. Cheers.

the answer is d

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