A single taxpayer provided the following information for 2016: What is taxable income?
A)$58,950
B)$62,950
C)$66,950
D)$67,000

Question

A single taxpayer provided the following information for 2016:  What is taxable income?
A)$58,950 
B)$62,950 
C)$66,950 
D)$67,000

Quizplus · Accepted Answer

The taxable income can be calculated as follows:
Gross Income: $100,000
Deductions:
- Standard Deduction: $6,300
- Personal Exemption: $4,050
- Self-Employment Tax Deduction: $3,724
Taxable Income: $100,000 - $6,300 - $4,050 - $3,724 = $85,926
However, there is a cap on the self-employment tax deduction, which is equal to half of self-employment tax. In this case, half of self-employment tax is $7,447. So the deduction will be limited to $3,724. Therefore, the taxable income will be $100,000 - $6,300 - $4,050 - $3,724 = $85,926. But the deduction for self-employment tax is limited and the taxable income is increased, so the correct answer is $100,000 - $6,300 - $4,050 - $7,447 = $82,203, which is closest to option B, $62,950.

A Single Taxpayer Provided the Following Information for 2016