Question

Ben is employed as a carpenter and his wife, Marilyn, is a self-employed consultant. Besides Ben’s salary, Ben and Marilyn own a condominium that they rent to tourists and do not use personally. This year they paid $2,200 for utilities in the condo. Marilyn also paid self-employment tax of $4,200 and Ben had $3,000 of Social Security taxes withheld from his pay. Which of the following is a true statement?A. one-half of Ben's Social Security tax is deductible for AGI
B. The cost of utilities is deductible for AGI
C. Marilyn's self-employment tax is not deductible
D. Only the $2,200 utility bill is deductible for AGI
E. None of the above is true

Answer 1

Answer:

B. The cost of utilities is deductible for AGI

Explanation:

The entire cost of the utilities would be for AGI deduction assuming no personal use of the condo. The employer portion of Marilyn's self-employment tax would be deductible as well.

Adjusted gross income (AGI) is a measure of income calculated from your gross income and used to determine how much of your income is taxable. It is the starting point for calculating a filer's tax bill in the United States and, among other things, is the basis for many deductions and credits. When filing your taxes online—as about 80% of filers do—the software you use will calculate your AGI for you.