Please confirm which answer is correct. So confused: Option 1 or option 2

1. Rank the following three single taxpayers in order of magnitude of taxable income (from lowest to highest) and explain your results. (Note: Use standard deduction amounts provide under the Tax Cut Job Acts (TCJA) enacted in November 2017). Please explain as well.

______________________________________________________Option 1__________________________________________________________________

___________________________________________________Option 2____________________________________________________________________

Alice: Gross Income = $80,000 Deductions for AGI = $15,000 Itemized deductions = 0 Brian: Gross Income = $80,000 Deductions for AGI = $5,000 Itemized deductions = $12,000 Craig: Gross Income = $80,000 Deductions for AGI = $0 Itemized deductions = $15,000 20 Description Alice Brian Craig Gross income 80,000 80,000 80,000 For AGI deductions (15,000) (5,000) 0 Adjusted gross income 65,000 75,000 80,000 From AGI deductions: Standard deduction 6,100 6,100 6,100 Itemized deduction 0 12,000 15,000 6,100 12,000 15,000 Greater of standard deduction (or) itemized deductions. 3,900 3,900 3,900 Personal and dependency exceptions Taxable income 55,000 59,100 61,100 Step-by-step explanation According to Internal Revenue Service, the standard deduction for single taxpayers and married couples filing separately was $6,350 in 2017 so, the taxable income for Alice : Gross Income: less: Standard Deduction allowed: Taxable income: $80,000 ( $6,350) (out of $15,000) $73,650 Brian : Gross Income : $80,000 In this case, the itemized deductions are more than the number of standard deductions, and hence one should choose the option which decreases the tax liability, then: Taxable income : $80,000 - $12,000 = $68,000 Craig : Gross Income: Less : Itemized Deduction : Taxable Income: $80,000 ( $15,000 $65,000 Now, ranking in order of magnitude of taxable income (from lowest to highest): 1.Craig : $65,000 2. Brian :$68,000 3.Alice: $73,650