You have a gross income of $117,151 and are filing your tax return singly. You claim one exemption and can take a deduction of $2,713 for interest on your mortgage, an adjustment of $2,791 for business losses, an adjustment of $1,346 for alimony, a deduction of $2,086 for property taxes, a deduction of $2,376 for contributions to charity, and an adjustment of $1,091 for contributions to your retirement fund. The standard deduction for a single filer is $5,700, and exemptions are each worth $3,650. What is the difference between your adjusted gross income and your taxable income?
First subtract the adjustments from gross income: $2,791 + $1,346 + $1,091 = $5,228, so adjusted gross income is $117,151 − $5,228 = $111,923. The itemized deductions total $2,713 + $2,086 + $2,376 = $7,175, which is more than the $5,700 standard deduction. Add the $3,650 exemption: $7,175 + $3,650 = $10,825. The difference is $10,825, choice C.
AI-written and checked against the verified answer.