Question

T and J are married, and have two dependent children that they adopted last year, as well as T's 67 year old aunt who lives with them. Their 2019 income tax facts are:

T's Wages $75.000

J's Wages $74,000

Short-Term capital Gain $10,000

Long Term capital Loss ($19,000)

Invested in a Traditional IRA $3,000

Invested in a ROTH IRA    $2,000

Alimony paid to a prior marriage $1,000 Monthly

T& J will not itemize.

What is T& J's adjusted gross income, and what is their taxable income?

Answer 1

Calculation for Adjusted gross income of T and J

T's wages		$ 75,000
J's wages		$ 74,000
Short term capital gain		$ 10,000
Total earnings / Income		$ 159,000
Less: Above the line deduction
Invested in traditional IRA	$ 3,000
Setting of loss on long term capital loss	$ 3,000
Alimony paid [ $ 1,000 X 12]	$ 12,000
		$ 18,000
Adjusted Gross Income		$ 141,000

Note: 1) Investment in Roth IRA doesn't comes under above the line deduction because it made out of after tax money .

2) Long term capital loss can maximum settled $ 3,000 each year with other income and rest can be carry forward.

Calculation for taxable income

Adjusted gross income	$ 141,000
Less: Standard deduction	$ 24,400
Taxable income of The and J	$ 116,600