Question

Mike has an adjusted gross income of $85,643. He claims two exemptions and can deduct $896 for state income tax, $2,145 for charitable donations, and $3,473 for medical expenses. If the standard deduction is $5,700 and exemptions are each worth $3,650, what is Mike’s total taxable income? a. $72,643 b. $75,479 c. $71,829 d. $66,129

Answer 1

The real answer is C. $71,829. Just took the engenuity test.

Answer 2

The gross income is $85,463
Here are the deduction before tax is applied:
$896 - income
$2,145 - charitable donations
$3,473 - medical expenses
2 x $3,650 - exemptions

Adding all the deductions:
$896 + $2,145 + $3,473 + 2 x $3,650 = $13,814

Subtracting this from the gross income:
$85,463 - $13,814 = $66,129