Question

Jamison Mitchell (43) is an unmarried, head of household taxpayer with the following income for the year: Wages $40,215; Bank interest $170; Municipal bond interest $195; Lottery prize $475; Gift from his father $14,000. Jamison contributed $3,150 to his traditional IRA, which he will deduct. What is Jamison's adjusted gross income?

Answer 1

Answer:

Explanation:

Adjusted Gross Income of an individual is the calculation of all an individuals earnings less authorised deductions.

Jamison Mitchell's Adjusted Gross Income is calculated thus:

1. Wages                                                  $40,215

2. Bank Interest                                      $170

3. Lottery Prize                                        $475

4. Municipal Bond Interest                     $195

Total Income                                             $41,055

Less: Contribution to IRA                       ($3,150)

Adjusted Gross Income                           $37,905

Please Note that Cash gift from either a father or Mother to their Child to the tune of $14,000 each is not classified as an income and so not taxable.