What is Kathy's Taxable Income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ASSIGNMENT #1 Question #1
Kathy Smith, age 42 and single, is a pilot for United Airlines. For 2022, her W-2 reported $125,000 in salary,
$15,700 federal income tax withheld, $6,500 state income tax withheld and the appropriate amount of Social
Security and Medicare withheld. Kathy rents an apartment for $3,000 per month in Santa Monica
pear LAX.
United Airlines pays $2,000 per year to provide Kathy with Group Term Life Insurance for coverage equal to one
year of Kathy's salary. She received a $20,000 gift from her grandfather to help her save for a down payment to
purchase a home. When she flies early morning flights, she is provided with free breakfast at the United Airlines
lounge, which would have cost her a total of $900 for the year. She is able to fly free on United. She took two
free flights for vacation in 2022, one to Cancun and one to the Bahamas. The cost of those two flights would have
been $300 and $600 respectively. In 2021, she itemized her deductions, which totaled $13,150.
Kathy's additional transactions for 2022 include:
Interest earned on bond issued by Intel Corporation
Charitable donation to her church
Medical expenses
Car insurance
State Tax refund for 2021 received in April 2022
Utilities on apartment
What is Kathy's Taxable Income?
3,000
2,000
1,000
1,600
1,500
2,500
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