Question

In: Accounting

3) Jane and Ed Rochester are married with a 2-year-old child, who lives with them and...

3) Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2019, Ed and Jane realized the following items of income and expense: Amount Items:

$ 35,000 Ed's Salary, $70,000 Jane's Salary , $400 Municipal bond interest income, $1,000 Qualified business income, $8,000 Alimony paid (divorce in 2018) $10,000 Real property tax (from AGI deduction) Their employers withheld $5,800 in federal income taxes from their paychecks.

A) What is their AGI?

B)What is their Taxable Income?

Solutions

Expert Solution

A.) AGI
Amount in $
Ed's Salary            35,000
Add: Jane's Salary            70,000
Add: Municipal bond interest income                 400
Add: Qualified business income              1,000
Gross Income        106,400
Less: Alimony paid (divorce in 2018 )              8,000
Less: Real property tax            10,000
AGI           88,400
B.) Taxable Income
Amount in $
AGI            88,400
Less: Standard Deduction            24,400
Taxable Income           64,000

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