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 2015, we need to follow these steps:
1. Calculate their adjusted gross income (AGI):
AGI = Total wages + Total interest income - Deductions for adjusted gross income
AGI = $41,000 + $500 - $5,000
AGI = $41,500
2. Determine their total deductions:
Total deductions = Itemized deductions + Exemptions
Total deductions = $7,950 + (Exemption amount * Number of exemptions)
Number of exemptions = 2 (mentioned in the question)
Exemption amount for 2015 = $4,000
Total deductions = $7,950 + ($4,000 * 2)
Total deductions = $7,950 + $8,000
Total deductions = $15,950
3. Calculate their taxable income:
Taxable income = AGI - Total deductions
Taxable income = $41,500 - $15,950
Taxable income = $25,550
Therefore, Jason and Mary's taxable income for the tax year 2015 is $25,550.