Question

The Smith couple files a joint return and have the following infor for 2020

Mortgage interest on their personal residence $6,000

Property taxes paid on their personal residence $2,500

Alimony payment made for divorce that was finalized in 2017 $12,000

Moving expenses $7,000

Business expenses from Mrs smith's small business $14,000

State income taxes paid $5,000

Investment interest $7,500

Personal casualty loss in federal disaster area $11,200

Unreimbursed employee expenses for Mr Smith $2,500

Depreciation on rental cabin primarily used for rentals $1,600

Adjusted gross income $81,000

Calculate the Smith's combined exclusions and deductions For AGI.

Please show your entire calculation

Answer 1

for finding the combined exclusion and deductions for Adjusted Gross Income first we need to identify the total receipts/Incomes and/or payment/expenses as it will be helpfull in calculation of combined exclusion and deduction.

Lets start the process of seggregating the information provided

Expenses:

1. Mortgage interest on personal residence of Smith Couple $6000 (deductable from income)

2. Property tax paid on personal residence $2500 (deductable Claimable for refund)

3. Alimony paid for Divorse $12000 (non Claimable for refund)

4. Moving Expenses $7000 (Deductable from Income tax)

5. Business Expenses from Mrs. Smith's business $14000 (deductible from income tax)

6. State Income Tax paid $5000 (deductible from Income tax)

7. Personal Casuality Loss in disaster Area $11,200 (non deductible from income tax)

8. Unreimbursed employee expenses $2500 (non deductible from Income tax)

9. Depreciation on rental Cabines $1600 (Deductible from Income tax)

10. Adusted Gross Income $81000 (gross Income)

Here we need to exclude/reduce the deductable line items (expenses and Losses from the Adjusted gross income)

Item no. 10-(sum of item number 1,2,4,5,6 and 9)

Net taxable income =81,000-(6000+2500+7000+14000+5000)=81000-34500=46500

Thus the Net taxable income should be $46500.