Question

In: Accounting

This year Jack intends to file a married-joint return. Jack received $172,500 of salary, and paid...

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?

Solutions

Expert Solution

Answer :

From the year 2018 & 2019 MAGI phaseout Limit for student loan is ($135000 - $165000) and (140000 - 170000)

(a)

- Year 2018 Year 2019
Salary 172500 172500
Less : Moving Expense (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 Expense 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 loan interest deduction [(2500) - (2500/30000)*(153000 - 135000)] 1000
2019 - Student loan interest deduction [(2500) - (2500/30000)*(153000-140000)] 1417

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