Marsha is single, had gross income of $50,000, and incurred the following expenses: $$\begin{array} { l r }
\text { Charitable contribution } & \$ 2,000 \
\text { Taxes and interest on home } & 7,000 \
\text { Legal fees incurred in a tax dispute } & 1,000 \
\text { Medical expenses } & 3,000 \
\text { Penalty on early withdrawal of savings } & 250
\end{array}$$ Her AGI is:
A)$39,750.
B)$49,750.
C)$40,000.
D)$39,750
E)None of these.

Question

Marsha is single, had gross income of $50,000, and incurred the following expenses: $$\begin{array} { l r } 
\text { Charitable contribution } & \$ 2,000 \
\text { Taxes and interest on home } & 7,000 \
\text { Legal fees incurred in a tax dispute } & 1,000 \
\text { Medical expenses } & 3,000 \
\text { Penalty on early withdrawal of savings } & 250
\end{array}$$ Her AGI is:
A)$39,750.
B)$49,750.
C)$40,000.
D)$39,750
E)None of these.

Quizplus · Accepted Answer

AGI (Adjusted Gross Income) is calculated by subtracting specific deductions from gross income. The penalty on early withdrawal of savings is an above-the-line deduction, reducing the gross income of $50,000 by $250, resulting in an AGI of $49,750. Other expenses listed are itemized deductions, not affecting AGI.

Marsha Is Single, Had Gross Income of $50,000, and Incurred