Answer:
Gross income=$54000
Adjusted gross income = $50000
Taxable income= $33700
Step-by-step explanation:
Step 1.
First we have to find his gross income:
The gross income consists of the total income of the man which is the wages and the interest from his savings account
Gross income = 51,500 + 2,500 = $54,000
Therefore his gross income is $54,000
Step 2.
Now we determine person's adjusted gross income
according to the question the contributed amount is $4,000
To calculate the adjusted gross income we use the formula:
Adjusted gross income = Gross income - Adjustment
Therefore $54,000 - $4,000 = $50,000
Hence his adjusted gross income is $50,000
step 3.
Now we determine person's taxable income
according to the question his personal exemption is $4050 and a standard deduction is $5950.
Now we calculate the itemized deduction by using this formula:
Itemized deduction = Interest on home mortgage + Taxes from state + Contribution to charity
= $8100 + $1450 + $2700
= $12,250
Here the itemized deduction is greater than the standard deduction.
So take the itemized deduction in the following formula for deductions.
Taxable income = Adjusted gross income - (Exemption + Deduction)
= $50,000 - ($4050 + $12250)
= $50,000 - ($16,300)
= $33,700
Hence the taxable income is $33,700.
