Sue is a 6th grade school teacher and wants to determine how much of her income this year will be taxable so that she can establish a financial plan for the upcoming year. The following facts apply: *She is single and has no dependents that she supports *Income from teaching: $40,000 *Interest on her savings account: $120 *Dividends she received from stock investments: $400 *She paid $200 in educator expenses to buy supplies for her classroom during the school year (Hint: this qualifies as an adjustment to arrive at AGI) *When she calculates what her itemized deductions would be, they amount to $2,800 (Note: The standard deduction amount for a single person = $12,400; the IRS allows the taxpayer to use the ‘higher’ of either itemized deductions or the standard deduction to arrive at taxable income) Using the following tax formula: Gross Income Less: Adjustments to arrive at ‘Adjusted Gross Income’ = Adjusted Gross Income Less: The > of either itemized deductions or the standard deduction amount = Taxable Income
Sue is a 6th grade school teacher and wants to determine how much of her income this year will be taxable so that she can establish a financial plan for the upcoming year.
The following facts apply:
*She is single and has no dependents that she supports
*Income from teaching: $40,000
*Interest on her savings account: $120
*Dividends she received from stock investments: $400
*She paid $200 in educator expenses to buy supplies for her classroom during the school year (Hint: this qualifies as an adjustment to arrive at AGI)
*When she calculates what her itemized deductions would be, they amount to $2,800 (Note: The standard deduction amount for a single person = $12,400; the IRS allows the taxpayer to use the ‘higher’ of either itemized deductions or the standard deduction to arrive at taxable income)
Using the following tax formula:
Gross Income
Less: Adjustments to arrive at ‘Adjusted Gross Income’
= Adjusted Gross Income
Less: The > of either itemized deductions or the standard deduction amount
= Taxable Income
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