A 11 t) | 106% Julia, age 26, is single and earned a $44k salary as HS Teacher a

Question

A 11 t) | 106% Julia, age 26, is single and earned a $44k salary as HS Teacher and has her disabled mother living with her and her dependent. Her Other Income consisted of $1,.100 interest on a certificate graduation gift in 2012 During 2018, she sold stocks that resulted in a $1k deductible capital loss. her itemized deductions are $11k Julia taxable income for the year 2018 and 2017? What are the differences? Using the Basic Standard Deductions Amounts per filing status YEAR 2018 Single $12k MFJ $24k MFS $12k HH $18 Surfing spouse $24k YEAR 2017 $6,350 $12,700 $6,350 $9,350 $12,700 Now, assumed that Julia incurred in medical expenses of $10k in year 2018. she also invested in financial planning fees of $2k and safety deposit box of $40, Calculate Julia taxable income with the new information for both tax vears 2017 & 2018 O Type here to search

Explanation / Answer

Computation of Taxable income 2018 2017 Salary income $44,000 $44,000 Interest on certificate of deposit $1,100 $1,100 Capital Loss ($1,000) ($1,000) AGI $44,100 $44,100 Less: Personal and dependent exemption $8,100 ($4050 each) Less: Itemized Deduction $11,000 Less: Standard Deduction $12,000 Taxable salary $32,100 $25,000 In year 2017, Julia can claim personal and dependent exemption for her dependent mother, where as personal and dependent exemption is eliminated in year 2018. In year 2017, standard deduction for single person is $6350, which is less than itemized deduction, thus she will go for itemized deduction, whereas in year 2018 standard deduction is $12K which is more than itemized deduction thus she will go for that. Computation of Taxable income 2018 2017 Salary income $44,000 $44,000 Interest on certificate of deposit $1,100 $1,100 Capital Loss ($1,000) ($1,000) AGI $44,100 $44,100 Less: Personal and dependent exemption $8,100 ($4050 each) Less: Itemized Deduction $7,811 Less: Standard Deduction $12,000 Taxable salary $32,100 $28,190 Itemized deduction: Medical expense $10,000 7.5 % of AGI $3,307.50 Deductible medical expenses (10000-3307.50) $6,692.50 Financial Planning fees (Misc. expense) $2,000 2% of AGI $882 Deductible Planning fees $1,118 Safety box deposit $400 2% of AGI $882 As it is less than 2% nothing is deductible Total Itemized deduction $7,810.50

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