A man earned wages of $38,100, received $1800 in interest from a savings account, and contributed $3400 to a tax-deferred retirement plan. He was entitled to a personal exemption of $4050 and had deductions totaling $6350. Find his gross income, adjusted gross income, and taxable income.
A man earned wages of $38,100, received $1800 in interest from a savings account, and contributed $3400 to a tax-deferred retirement plan. He was entitled to a personal exemption of $4050 and had deductions totaling $6350. Find his gross income, adjusted gross income, and taxable income.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A man earned wages of $38,100, received $1800 in interest from a savings account, and contributed $3400 to a tax-deferred retirement plan. He was entitled to a personal exemption of $4050
and had deductions totaling $6350. Find his gross income, adjusted gross income, and taxable income.
His gross income was $
(Simplify your answer.)
C
Expert Solution
Step 1
Gross income is used to refer to the total amount of earnings that an individual receives, which includes salaries, capital gains, etc.
The adjusted gross income is the income remaining after the necessary adjustments are made. They include the expenses, the losses in capital gains, the contributions to retirement plans and medicare policies, etc.
The taxable income is the remaining income on which taxes are paid. It is calculated by removing deductions and exemptions from the adjusted gross income.
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