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@jim_thompson5910 @zepdrix @.Sam. @ganeshie8 @aaronq
how far did you get?
im still stuck on number 1. :(
ok sorry, one sec, I'm reading an article on how to calculate all this it's definitely a lot, but I think I can translate it all for you
wow thank you so much :)
is it too difficult? :(
no I think it's doable, still reading though
oh thank god!!!!
according to this page here http://www.obliviousinvestor.com/the-difference-between-exemptions-deductions-and-credits/ it states that "The IRA contribution is an above the line deduction, and the charitable donation is a below the line" and from this page here: http://www.irs.gov/taxtopics/tc456.html it states that "The deduction is claimed as an adjustment to income so you do not need to itemize your deductions" so this means that student loan interest deductions are above the line deductions ------------------------------------------------------- so what this means is that you start with the gross income of 24600, then you subtract off the above the line deductions to get (gross income) - (IRA contributions) - (student loan interest payments) (24600) - (600) - (1675) 22,325 So the adjusted gross income (AGI) is $22,325
this is a lot and it's all for #1, hopefully it all makes sense (read it over a few times if it doesn't)
oh my gosh ok one second
ok my dad just explained it a little better to me:) thank you!
alright so how do we go about number 2?
there is only one itemized deduction in this case, and it is the $940 in charitable donations made
so you have a choice, you can either choose a) the standard deduction of $5700 OR b) the itemized deductions of $940 which one do you choose?
oh my gosh im sorry my account got messed up i used an email i could verify haha but ummmm lets go with the standard :)
good choice, you can choose whichever option you want, but if you want to save more money, you go with the higher deduction
so that wraps up #2
for #3, there are 2 personal exemptions: you and your kid each exemption is 3650, so 2 of those exemptions gives you 2*3650 = 7300 so the value of your exemptions is 7300
okay :) whats next?
finally for #4, you subtract off the deductions and the exemptions so... (AGI) - (deductions) - (exemptions) (22325) - (5700) - (7300) 9,325 this means that the final taxable income is $9,325
wait! i thought we were on number 3?
#3 is just calculating the exemptions
#4 is calculating the taxable income
once you get 7300 in exemptions, you're done with #3
i dont get it? can you show the work for number 3 so i understand?
all you do for #3 is 2*3650 = 7300
not much work to show really
remember there are 2 exemptions: you and your child
oh now i feel super stupid :( lol
its ok, you're not dumb
wow. @jim_thompson5910 i applaud you
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