Question

Tom is single and 68 years old. He has excellent eyesight. In 2019, Tom earned W-2 wages of $162,560 from his full-time job at Six Minutes, ABS, Inc. He also received tips in that year of $8,076 by playing requests on the marimba. Tom did not receive any Social Security benefits. Tom paid alimony of $17,026 to his ex-wife (pursuant to their 2015 written divorce agreement.) Tom had few allowable itemized deductions on Schedule A, so he claimed the standard deduction.

For 2019:

1) Tom's Taxable Income is $_______________________. (Important: For your answer, enter whole numbers only. Do not enter a dollar sign ( "$" ) or a comma ( " , " ) in your answer.)

Answer 1

Tom's taxable income is calculated as follows:-

Particulars	Amount
Wages	162,560
Tips	8,076
Alimony Payment	(17,026)
Adjusted Gross Income	153,610
Less:- Standard Deduction	(13,850)
Taxable Income	139,760

Please note that per IRS, Tips are also included as part of the total income and hence they should be included in the calculation of taxable income. Similarly, since Alimony divorce agreement was executed in 2015, it is still eligible to be excluded from calculating the Total taxable income.

Also, per IRS, the standard deduction allowed for an individual filing single and who is 68 years old is $13,850 which has been appropriately deducted in the calculation of Taxable Income for Tom.