Question

This year Jack intends to file a married-joint return. Jack received $172,500 of salary, and paid $5,000 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid moving expenses of $4,300 and $28,300 of alimony to his ex-wife, Diane, who divorced him in 2012.

a. What is Jack's adjusted gross income?

b. Suppose that Jack also reported income of $8,800 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Jack report under these circumstances?

Answer 1

Answer :

(a).

	Year 2018	Year 2019
Salary	172500	172500
Less : Moving expenses (from 2018)	0	0
Less : Alimony paid	-28300	-28300
Modified adjusted income	144200	144200
Less: Student loan interest deduction	-1733	-2150
Jack's AGI	142467	142050

For a

2018 Student loan interest deduction (2500) - (2500 / 30000)*(144200 - 135000) = 1733

2019 Student loan interest deduction (2500) - (2500 /30000)*(144200 - 140000) = 2150

(b)

	Year 2018	Year 2019
Salary	172500	172500
Income from partnership	8800	8800
Less : Moving Expenses (from 2018)	0	0
Less : Alimony paid	-28,300	-28,300
Modified adjusted income	153000	153000
Less : Student loan interest deduction	-1000	-1417
Jack's AGI	152000	151583

For b

2018 Student interest deduction [(2500) - (2500 / 30000)*(153000 -135000)] = 1000

2019 Student loan interest deduction [(2500) - (2500/ 30000)*(153000 -140000)] = 1417

Note : Above answer is given from the year 2018 and 2019, MAGI phaseout limit for student loan is ($135000 - $165000) and (140000 - 170000)

Since nothing is mentioned about year,therefore, Answer is per year 2018 and 2019 has been posted.

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