Question

Rank the following three single taxpayers in order of the magnitude of taxable income (from lowest to highest). (First mean highest taxable income, third means lowest taxable income.) Gross income Deductions for AGI Itemized deductions Deduction for qualified business income Ahmed Baker Chin $ 96,100 $ 96,100 $ 96,100 15,550 8,550 0 0 7,650 14,325 0 1,925 10,000 Ahmed Baker Chin
Please Bold answers, thank you!

Answer 1

Amounts are in $

Part 1 :

Taxable income = Gross Income - Deduction for AGI - Itemized deduction - QBI deduction

1. Ahmed = 96,100 - 15,550 = 80,550

2. Baker = 96,100 - 8,550 - 7,650 - 1,925 = 77,975

3. Chin = 96,100 - 14,325 - 10,000 = 71,775

Part 2 :

Assuming for this question, the year is 2019

Description	Assumption 1	Assumption 2
Gross income before new work engagement	52,500	52,500
Income from engagement	7,450	6,750
Additional for AGI deduction	(3,550)	0
Adjusted gross income	56,400	59,250
Standard deduction	(12,200)	(12,200)
Deduction for QBI	0	(1,350)
Taxable Income	44,200	45,700

Note :

Standard deduction for single tax payer in year 2019 is $12,200

(If you assume any other year, you will have different Standard deduction amount and this different taxable income)

(Given there are no itemized deduction available)

QBI deduction is 20% of QBI income = 20% x 6,750 = 1,350