Question

Bob Katz and Sally Mander are a married couple with four children. Total wages for 2018 equaled $96,400. Stock which had been purchased nine months earlier was sold for a $1,600 gain and stock held for three years was sold for a $4,000 gain. Interest income from savings was $100. Itemized deductions totaled $21,500. Bob and Sally qualify for a $1,000 tax credit. What is Bob's and Sally's taxable income

Answer 1

Answer:

$79,600

Explanation:

Solution

Given that:

Now,

The total wages = $96,400

The stock gain = $1600 and $4000

The saving Interest income  = $100

Thus,

To determine Bob's and Sally's taxable income is as follows:

The taxable income = total wages + stock gain + Interest income from saving

So,

The taxable income = $96,400 + $1600 + $4000 + $100

Taxable income = $102,100

The itemized total deductions = $21,500

Tax credit = $1000

Taxable income = $102,100 - $21,500 = $80,600

Taxable income = $80,600 - Tax credit

Taxable income = $80,600 - $1000 = $79,600

Therefore Bob's and Sally's taxable income will be = $79,600

Answer 2

The taxable income of the final portion of total income of the individual or the company over which the taxpayer is liable to pay off the tax liability.

The taxable income is determined by deducting the itemized deductions such as deductible expenses and deductible incomes from the total income earned.

It also deducts the tax credit of previous years for the final determination of the taxable income.

The tax rate over the taxable income is charged variably as per the type of income earned.

The statement determining the taxable income is attached below in the image.

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