Bianca and Dave are a married couple filing a joint tax return. They have a combined gross income of $81,031 and claim four exemptions. They can make an adjustment of $2,914 for business expenses, an adjustment of $1,939 for business losses, a deduction of $4,140 for medical expenses, an adjustment of $4,825 for contributions to their retirement fund, and a deduction of $2,420 for charitable donations. If exemptions are worth $3,650 apiece and the standard deduction for a joint return is $8,350, what is their total taxable income?

Question

Bianca and Dave are a married couple filing a joint tax return. They have a combined gross income of $81,031 and claim four exemptions. They can make an adjustment of $2,914 for business expenses, an adjustment of $1,939 for business losses, a deduction of $4,140 for medical expenses, an adjustment of $4,825 for contributions to their retirement fund, and a deduction of $2,420 for charitable donations. If exemptions are worth $3,650 apiece and the standard deduction for a joint return is $8,350, what is their total taxable income?

a.
$50,193
b.
$41,843
c.
$48,403
d.
$52,793

Answer 1

To determine their total taxable income, we need to subtract their adjustments, deductions, and exemptions from their gross income.

First, let's calculate their total adjustments:
Total adjustments = Business expenses adjustment + Business losses adjustment + Contributions to retirement fund adjustment
Total adjustments = $2,914 + $1,939 + $4,825 = $9,678

Next, let's calculate their total deductions:
Total deductions = Medical expenses deduction + Charitable donations deduction
Total deductions = $4,140 + $2,420 = $6,560

Now, let's calculate their total exemptions:
Total exemptions = Number of exemptions * Value of each exemption
Total exemptions = 4 * $3,650 = $14,600

Now, let's subtract their total adjustments, deductions, and exemptions from their gross income to find their total taxable income:
Total taxable income = Gross income - Total adjustments - Total deductions - Total exemptions
Total taxable income = $81,031 - $9,678 - $6,560 - $14,600
Total taxable income = $50,193

Therefore, their total taxable income is $50,193. Option a. $50,193 is the correct answer.

Answer 2

To calculate their total taxable income, we need to start with their combined gross income and make adjustments for various deductions and exemptions.

1. Start with the combined gross income:
$81,031

2. Calculate the total exemption amount (4 exemptions x $3,650 each):
4 x $3,650 = $14,600

3. Subtract the total exemption amount from the combined gross income:
$81,031 - $14,600 = $66,431

4. Subtract the adjustment for business expenses:
$66,431 - $2,914 = $63,517

5. Subtract the adjustment for business losses:
$63,517 - $1,939 = $61,578

6. Subtract the deduction for medical expenses:
$61,578 - $4,140 = $57,438

7. Subtract the adjustment for contributions to their retirement fund:
$57,438 - $4,825 = $52,613

8. Subtract the deduction for charitable donations:
$52,613 - $2,420 = $50,193

Therefore, their total taxable income is $50,193 (option a).