Question

Ellen is 55 years old and married to 48-year-old, Gary. They have one dependent daughter, Angie, who is 17 years old. Their itemized deduction would include $15,000 total in taxes, $8,000 in mortgage interest, and $3,000 to charity. Their AGI for 2019 is $95,000. What would be their taxable income on their 2019 return?

a) $69,000

b) $74,000

c) $70,600

d) $70,100

Answer 1

Ellen is 55 year old and married to 48 year old, Gary. Thus it is assumed that their filing status is Married filing jointly.

The adjusted gross income given is $95000.

To calculate their taxable income we have to deduct standard or itemized deductions from the adjusted gross income (AGI).

Standard deduction or itemized deductions are used to reduce taxable income, imitized deduction can be more than standard deduction but standard deduction is taken if imitized deduction is lower than standard deduction.

Standard deduction is based on status of filing in given case it would be $24400.

In given case the imitized deduction is $21000 ( adjusted for $15000 tax paid , $8000 mortgage interest paid and $3000 charity paid). The imitized deduction is lower than standard deduction of $24400 for given case.

Hence Taxable income = $95000 - $ 24400. = $70600.

The correct answer is Option--C.

Regarding the child tax credit and dependents credit it will not impact the taxable income but will impact the tax payable as credit of those are given.