Question

This is my first time joining! I have a question. I don't know how to figure out any of the questions in this picture...someone help?

Answer 1

@jim_thompson5910 @zepdrix @.Sam. @ganeshie8 @aaronq

Answer 2

how far did you get?

Answer 3

im still stuck on number 1. :(

Answer 4

@jim_thompson5910 ??

Answer 5

ok sorry, one sec, I'm reading an article on how to calculate all this

it's definitely a lot, but I think I can translate it all for you

Answer 6

wow thank you so much :)

Answer 7

is it too difficult? :(

Answer 8

no I think it's doable, still reading though

Answer 9

oh thank god!!!!

Answer 10

according to this page here

http://www.obliviousinvestor.com/the-difference-between-exemptions-deductions-and-credits/

it states that

"The IRA contribution is an above the line deduction, and the charitable donation is a below the line"


and from this page here: http://www.irs.gov/taxtopics/tc456.html

it states that

"The deduction is claimed as an adjustment to income so you do not need to itemize your deductions"

so this means that student loan interest deductions are above the line deductions

-------------------------------------------------------


so what this means is that you start with the gross income of 24600, then you subtract off the above the line deductions to get


(gross income) - (IRA contributions) - (student loan interest payments)


(24600) - (600) - (1675)


22,325


So the adjusted gross income (AGI) is $22,325

Answer 11

this is a lot and it's all for #1, hopefully it all makes sense (read it over a few times if it doesn't)

Answer 12

oh my gosh ok one second

Answer 13

ok my dad just explained it a little better to me:) thank you!

Answer 14

that's great

Answer 15

alright so how do we go about number 2?

Answer 16

there is only one itemized deduction in this case, and it is the $940 in charitable donations made

Answer 17

so you have a choice, you can either choose

a) the standard deduction of $5700

OR

b) the itemized deductions of $940


which one do you choose?

Answer 18

oh my gosh im sorry my account got messed up i used an email i could verify haha but ummmm lets go with the standard :)

Answer 19

@jim_thompson5910

Answer 20

good choice, you can choose whichever option you want, but if you want to save more money, you go with the higher deduction

Answer 21

so that wraps up #2

Answer 22

for #3, there are 2 personal exemptions: you and your kid

each exemption is 3650, so 2 of those exemptions gives you 2*3650 = 7300

so the value of your exemptions is 7300

Answer 23

okay :) whats next?

Answer 24

finally for #4, you subtract off the deductions and the exemptions

so...

(AGI) - (deductions) - (exemptions)

(22325) - (5700) - (7300)

9,325


this means that the final taxable income is $9,325

Answer 25

wait! i thought we were on number 3?

Answer 26

#3 is just calculating the exemptions

Answer 27

#4 is calculating the taxable income

Answer 28

once you get 7300 in exemptions, you're done with #3

Answer 29

i dont get it? can you show the work for number 3 so i understand?

Answer 30

all you do for #3 is 2*3650 = 7300

Answer 31

not much work to show really

Answer 32

remember there are 2 exemptions: you and your child

Answer 33

oh now i feel super stupid :( lol

Answer 34

its ok, you're not dumb

Answer 35

wow. @jim_thompson5910 i applaud you

Answer 36

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