Question

This year Evan graduated from college and took a job as a deliveryman in the city. Evan was paid a salary of $73,200 and he received $700 in hourly pay for part-time work over the weekends. Evan summarized his expenses as follows: $1,200 Cost of saving his possessions to the city (125 miles away) Interest paid on accumulated student loans Cost of purchasing a delivery uniform Contribution to State University deliveryman progra Calculate Evan's AGI and taxable income if he files single. Assume that interest payments were initially required on Evan's student loans this year Evan's Aol

There is no extra infomation.

Answer 1

TAXABLE INCOME
SALARY	73200
PART TIME HOURLY PAY	700
GROSS INCOME	73900
LESS : MOVING EXPENSES DEDUCTION	1200
MODIFIED AGI (FOR STUDENT INTEREST)	72700
LESS -STUDENT LOAN INTEREST DEDUCTION	1217
AGI	71483
LESS - STANDARD DEDUCTION	12200
TAXABLE INCOME	59283
CALCULATION OF INTEREST DEDUCTION NOT ALLOWED
	(72700-65000)
	(80000-65000)
=	51.33%
INTEREST PAID	2830
BUT LIMIT FOR MAXIMUM DEDUCTION IS	$2500
SO AMOUNT AMOUNT CALCULATE ON THAT NOT ALLOWED	=2500*51.33%
	1283.25
INTEREST DEDUCTION AMOUNT (2500-1283)	1217
The uniform would qualify as an employee business deduction, but would be reduced by the 2% floor on miscellaneous itemized deductions (by 2% of $71,483 = $1430). The charitable contribution would be deductible as an itemized deduction, but Evan would choose his standard deduction instead of itemizing (because thestandard deduction ($6,300) exceeds the sum of his itemized deductions.