What is Jack\'s adjusted gross income? Assume that Jack will opt to treat tax it

Question

What is Jack's adjusted gross income? Assume that Jack will opt to treat tax items in a manner to minimize his AGI. This year Jack intends to file a married-joint return with two dependents. Jack received $162,500 of salary and paid $5,000 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid qualified moving expenses of $4,300 and $24,000 of alimony Suppose that Jack also reported income of $8,800 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Jack report under these circumstances? Again, assume that Jack will opt to treat tax items in a manner to minimize his AGI.

Explanation / Answer

Calculation of Jack's Adjusted Gross Income :-

(Assume that Jack will opt to treat tax items in a manner to minimize his AGI.)

Working Note 1 :- Deduction for 2016

Deduction for Student Loan Interest = $2500 * (100% - 14%) = $2150

((134200 - 130000)/30000 = 14%)

Calculation of AGI of Jack :-

Particulars Amounts ($) Salary 162500 Less : Expenses ($4300 + $24000) (28300) AGI 134200 Less : Deduction for Student Loan Interest (Working Note 1) (2150) Final AGI ($134200 - $2150) 132050

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