[Anonymous]

Tom Lewis, a single taxpayer, had the following income and expense items for 2014:

Wages $55,000

Alimony paid to former spouse 5,000

Child support paid to former spouse 4,000

Deductible moving expenses 2,000

Mortgage interest on personal residence 6,000

Credit card interest 1,000

Tom’s personal exemption amount for 2014 3,950

Tom’s standard deduction amount for 2014 6,200

What is Tom’s adjusted gross income for the year?

A. $55,000

B. $50,000

Correct C. $48,000

D. $46,000

The key points for this question are:

alimony paid to former spouse is an adjustment to gross income.

child support is not an adjustment to gross income (child support is not deductible on an individual tax return).

moving expenses are an adjustment to gross income.

Thus, adjusted gross income for this question is calculated as follows:

Wages $55,000

Minus Alimony (5,000)

Minus Moving expenses (2,000)

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Adjusted gross income $48,000

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Why do you not take into account the standard deduction and personal exemption when calculating AGI?

[IQEX]

It's because the standard and personal exemptions are below the line (they are asking for AGI which is pertaining to income and certain adjustments that are above the line). Have a look at first page of chapter R1 of Becker to see how it's all laid out. Hope that helps!

[Author]

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