Jason and Mary are married taxpayers in 2015. They are both under 65. For the tax year, they have a total of $41,000 in wages and $500 in interest income. Their deductions for adjusted gross income is $5,000 and their itemized deductions equal $7,950. They claim two exemptions for the year on their joint tax return. What is their 2015 taxable income?
To calculate Jason and Mary's taxable income for the year 2015, we need to follow a series of steps.
1. Start with their total income:
Wages: $41,000
Interest income: $500
Total income: $41,000 + $500 = $41,500
2. Subtract their deductions for adjusted gross income (AGI):
Deductions for AGI: $5,000
AGI = Total income - Deductions for AGI
AGI = $41,500 - $5,000 = $36,500
3. Determine their itemized deductions:
Itemized deductions: $7,950
4. Subtract their itemized deductions from their AGI:
Taxable income = AGI - Itemized deductions
Taxable income = $36,500 - $7,950 = $28,550
5. Determine the number of exemptions claimed:
Exemptions claimed: 2
6. Calculate the exemption amount:
For the tax year 2015, each exemption is worth $4,000.
Exemption amount = Exemptions claimed * Exemption value
Exemption amount = 2 * $4,000 = $8,000
7. Subtract the exemption amount from the taxable income:
Taxable income = Taxable income - Exemption amount
Taxable income = $28,550 - $8,000 = $20,550
Therefore, Jason and Mary's taxable income for the year 2015 is $20,550.