Question

Jennifer and Jamar are married and live in a home with their 13-year-old dependent son, Oscar. This year, they had the following tax information. Jamar’s salary $ 60,000 Jennifer’s Qualified Business Income from sole proprietorship 95,000 Dividend income 2,800 Deduction for self-employment tax 6,712 Itemized deductions 19,200 Compute adjusted gross income (AGI) and taxable income.

Multiple Choice

A. AGI $157,800; taxable income $124,188.

B. AGI $157,800; taxable income $130,900.

C. AGI $151,088; taxable income $89,888.

D. AGI $151,088; taxable income $107,688.

Answer 1

	Particulars	Amount ($)	Working
a	Salary Income	$         60,000
b	Business Income	$         95,000
c	Dividend Income	$           2,800
d	Gross Income	$       157,800	a + b + c
	For AGI Deduction
e	Self employment tax	$           6,712
f	Adjusted Gross Income	$       151,088	d - e
g	Itemized Deduction	$         19,200
h	Standard Deduction	$         24,400
i	Greater of G & h	$         24,400
j	QBI Deduction ($95,000 * 20%)	$         19,000
	Taxable Income	$       107,688	f - I - j

So, the correct option is D. AGI $151,088; taxable income $107,688