Question

Ian & Isabella had a gross income of $102,500.

Ian, 37, and Isabella, 36, are married and file a joint tax return. They have one child, Ingrid (Isabella's daughter from a prior marriage; age 14; lives with Isabella and Ian all year and is claimed as a dependent (QC) on their joint return).

Ian and Isabella paid the following expenses in 2018:

Federal income taxes withheld on wages: $9,000 State & local income taxes: $8,000 Property taxes on principal residence: $5,000 Sales tax: $1,000 Interest on credit card used for personal travel: $4,500 Interest on $350,000 mortgage used to purchase principal residence: $3,000 Interest on $20,000 home-equity loan used to improve their principal residence: $1,000 Student loan interest: $3,000 Investment interest: $1,500 Investment advisory fees: $800 Charitable contribution (cash): $1,000 Unreimbursed employee business expenses (job supplies): $750 Ian and Isabella's home is worth $550,000. The couple has no investment income. They have proper records to substantiate all expenses, including the charitable contribution.

What is Ian and Isabella's AGI?

Answer 1

Before going forward for the solution, please keep note that the items eligible for deduction to calculate adjusted gross income (AGI) are only:

1. Educator expenses;

2.Business Expenses;

3. Health savings account deduction;

4. Self employment tax deduction;

5.self employed qualified plans;

6.Alimony paid

7. Student loan interest

rest are itemized deductions and deducted to calculate taxable income only. So now please find working for calculation of AGI.