Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information. 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.  Compute their adjusted gross income (AGI) and taxable income.

Quizplus · Accepted Answer

The Dell's gross income is $73,500 ($57,500 + $16,000). They can claim the standard deduction of $12,400. This gives an adjusted gross income of $61,100 ($73,500 - $12,400). They also get a deduction for contributions to an IRA. They mention a contribution of $2,400. 
Thus, AGI = $61,100 - $2,400 = $58,700
Their taxable income is calculated as follows:
$58,700 - $24,800 (standard deduction + personal exemptions) = $33,900.
However, they are eligible to claim the "Saver's Credit" of 10% on their IRA contributions up to $4,000. They contributed $2,400 to their IRA, so they can get a credit of $240. This will reduce their tax liability. 
Thus, their final taxable income is $33,900 - $240 = $33,660. 
Therefore, the correct answer is B.

Mr and Mrs