Question

Scenario: You are 33 years old, single, earn $55,000 per year, and are in the 25% tax bracket. You want to understand the federal tax system and plan ahead so as not to pay unnecessary sums to the government in taxes. For this tax year, you contributed $1,500 to an employer-sponsored 401(k), paid student loan interest of $900, had out-of-pocket medical and dental expenses of $2,000, made gifts to charity of $1,500, and made rent payments totalling $10,200 during the year.

Based on your personal information provided above, complete the following table to determine your taxable income.

Hint: Remember that the U.S Tax Code provides for a standard deduction of $6,300 and a personal exemption of $4,050. Enter adjustments, deductions, and exemptions as negative numbers. If your answer is zero, enter "0".

Taxable income calculation
Total income
Less: Adjustments to income
Adjusted gross income
Less: Deductions
Subtotal
Less: Exemptions
Taxable income

Answer 1

Particulars	Amount	Amount
Wages		$      55,000
Less: 401(k) contribution		$       (1,500)
Total income		$      53,500
Less: adjustments to income (student loan interest)		$          (900)
Adjusted gross income		$      52,600
Less: deductions
Higher of :
Standard deduction (1)	$    6,300
Itemized deductions (2)
Medical expenses	$          -
Charity	$    1,200
Itemized deductions (2)	$    1,200
Higher of (1) and (2)		$       (6,300)
Sub total		$      46,300
Less: exemption		$       (4,050)
Taxable income		$      42,250

Medical expenses are not deductible as they are not more than ten percent of AGI.

Please rate.