This year Jack intends to file a married-joint return with two dependents. Jack
ID: 2574053 • Letter: T
Question
This year Jack intends to file a married-joint return with two dependents. Jack received $167,500 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. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) a. What is Jack's adjusted gross income? Assume that Jack will opt to treat tax items in a manner to minimize his AGI.
Explanation / Answer
Answer:
Jack's adjusted gross income is
Salary and gross income ( already given) = $157500
Less: Alimony = $24000
Moving expense deduction = $4300
New Modified AGI = $129200
Jack is allowed to deduct part of his Annual student loan interest payment as his modified AGI is not above $150000. Maximum deduction before the phase out is $2500 and is phased out over a range of $30000 range begining with Modified AGI of $120000.
Jack's Eduction interest deduction would be 2500 - 2500(( 129200 -120000)/30000) = $1733
deduction of Student loan interest from Modified AGI = $1,733
Jack's AGI (129200- 17300) = $127,467
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