Question

A woman earned wages of ​$32 comma 000​, received ​$2600 in interest from a savings​ account, and contributed ​$3500 to a​ tax-deferred retirement plan. She was entitled to a personal exemption of ​$4050 and had deductions totaling ​$7090. Find her gross​ income, adjusted gross​ income, and taxable income.

Answer 1

Answer:

1. Gross income = $34,600

2. Adjusted gross income = $31,100

3. Taxable income = $19,960

Explanation:

Given data;

Earned wages = $32,000

Interest received = $2600

Tax contribution = $3500

Personal exemption = $4050

Deductions = $7090

1. Gross income; All earnings before any tax payment or deductions

Gross income = $32,000 + $2600

                       =$34,600

2. Adjusted gross income:

The adjusted amount from the question is $3500,

Therefore,

Adjusted gross income = Gross income - adjusted amount

                                       = $34,600 - $3500

                                       = $31,100

3. Taxable income: It's calculated using the formula;

Taxable income = adjusted gross income - exemption + deductions

Substituting, we have;

Taxable income = $31,100 - ($4050+ $7090)

                           = $31,100 - $11,140

                          =$19,960