Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information. $$\begin{array} { l r }
\text { Salaries } & \$ 63,000 \
\text { Dividend incorne } & 1,900 \
\text { Above-the-line deductions } & 6,200 \
\text { Iterrized deductions } & 14,000
\end{array}$$ Compute their adjusted gross income (AGI) and taxable income.

Question

Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information. $$\begin{array} { l r } 
\text { Salaries } & \$ 63,000 \
\text { Dividend incorne } & 1,900 \
\text { Above-the-line deductions } & 6,200 \
\text { Iterrized deductions } & 14,000
\end{array}$$ Compute their adjusted gross income (AGI) and taxable income.

Quizplus · Accepted Answer

To compute the adjusted gross income, we need to subtract the above-the-line deductions from the total income. Therefore,
AGI = Salaries + Dividend income - Above-the-line deductions
AGI = $63,000 + $1,900 - $6,200 = $58,700

To compute the taxable income, we need to subtract the itemized deductions from the AGI and then apply the standard deduction for their filing status. Therefore,
Taxable income = AGI - Itemized deductions - Standard deduction
Taxable income = $58,700 - $14,000 - $12,100 (standard deduction for married filing jointly in 2020)
Taxable income = $32,600

Therefore, the correct choice is B, with an AGI of $58,700 and a taxable income of $36,600.

Mr and Mrs Compute Their Adjusted Gross Income (AGI) and Taxable Income