Pyuish and Vi Kashia file a 1040 jointly. Pyuish earned $37,570 and Vi earned $41,230. The Kashias have three children. Both Pyuish and Vi contributed $2,000 to their IRAs. They had $3,129 in medical and dental expenses. They paid $2,670 in real estate taxes, $1,220 in student loan interest, $4,890 in mortgage interest, and made $3,000 in charitable contributions. What is their taxable income?
$45,520;
Total income: $78,800; subtract the IRA contributions; $78,800 - $4,000 = $74,800;
Medical and dental of $3,129 is less than 7.5% of adjusted gross income, so it is not deductible.
Total deductions: $11,780; Deduct for exemptions: 5 × $3,500 = $17,500
Subtract deductions and exemptions from the adjusted gross income:
$74,800 - $11,780 - $17,500 = $45,520
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