Jeffrey earned a gross income of $51,280 last year. He made $1,746.83 in student loan interest deductions, donated $2,914 to his favorite charities and paid $3,941.47 in home mortgage interest. Jeffrey claims a standard deduction of $11,400 for himself and his non-working spouse. If their exemption is $7,300, what is their taxable income?
26,891.70
$23,977.70
$35,377.70
$30,833.17
my answer is d
you need to determine which deductions are ignored if he takes the standard deduction...
To calculate Jeffrey's taxable income, you need to subtract the deductions from his gross income.
First, add up all the deductions:
- Student loan interest deductions: $1,746.83
- Charitable donations: $2,914
- Home mortgage interest: $3,941.47
- Standard deduction: $11,400
Total deductions = $1,746.83 + $2,914 + $3,941.47 + $11,400 = $19,002.30
Next, subtract the total deductions from Jeffrey's gross income:
Taxable income = Gross income - Total deductions
= $51,280 - $19,002.30
= $32,277.70
However, we still need to consider the exemption. The exemption is deducted from the taxable income to further reduce the amount subject to taxation. In this case, the exemption is $7,300.
Final taxable income = Taxable income - Exemption
= $32,277.70 - $7,300
= $24,977.70
Therefore, option b) $23,977.70 is the correct answer.
To find their taxable income, we need to subtract the deductions and exemptions from their gross income.
Gross income: $51,280
Student loan interest deduction: $1,746.83
Charitable donations: $2,914
Home mortgage interest deduction: $3,941.47
Standard deduction: $11,400
Exemption: $7,300
Taxable income = Gross income - Deductions - Exemption
Taxable income = $51,280 - ($1,746.83 + $2,914 + $3,941.47 + $11,400 + $7,300)
Taxable income = $51,280 - $27,301.3
Taxable income = $23,978.7
Therefore, the correct answer is $23,978.70, which is option b.