Susie is single and has determined the following tax informa

Susie is single and has determined the following tax information
for the year: regular gross salary - $30,000; customer tips - $1,500 ($1,000 received
in her regular paychecks and $500 received in cash directly from customers); cash gift
from her Papa - $2,000; interest earned - $20; Federal income tax refund - $600;
Traditional IRA contribution - $1,000; personal exemption - $3,950; itemized
deductions - $4,900; and standard deduction - $6,200. – Using the above facts, what is Susie’s federal taxable
income for the year?

Solution

Susie’s federal taxable income for the year:

regular gross salary - $30,000

ADD: customer tips - $1,500

ADD: interest earned - $20

LESS: Federal income tax refund - $600

LESS: Traditional IRA contribution - $1,000

LESS: personal exemption - $3,950

LESS: standard deduction - $6,200

Federal taxable income = (30000+1500+20-600-1000-3950-6200) = 19770