Question
Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2016, Ed and Jane realized
Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2016, Ed and Jane realized the following items of income and expense: Item Amount Eds Salary $55,000 Janes Salary 34,400 Interest income on their saving account 600 Municipal bond interest income 400 Lottery winning 6,000 Alimony paid to Eds ex-wife (7,000) Child support paid to Eds ex-wife (5,000) Real property tax (10,000) Home mortgage interest expenses (6,000) They also qualified for a $1,000 tax credit. Their employers withheld $1,800 in taxes from their paychecks (in the aggregate). Finally, the 2016 standard deduction amount is $12,600 and the 2016 exemption amount is @$4,050. Please answer the following questions: a. What is the couples gross income? b. What is the couples adjusted gross income (AGI)? c. What is the couples itemized deduction? d. What is the couples taxable income?
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