Compute the gross income, adjusted gross income, and taxable income in the following situation. Use the exemptions and deductions in the table to the right. Explain how it was decided whether to itemize deductions or use the standard deduction. Sara is married, but she and her husband filed separately. Her salary was $31,100, and she earned $520 in interest. She had $3200 in itemized deductions and claimed four exemptions, for herself and three children.

Tax Rate 10% 15% 25% Married Filing Separately up to $9325 up to $37,950 up to $76.550 125% 28% 33% 35% up to $76,550 up to $116,675 up to $208,350 up to $235,350 above 12 CO 39.6% above $235,350 $6350 Standard deduction Exemption (per person) $4050