Calculate Kendra Thayer's taxable income, being sure to consider her exemption. Assume that the standard deduction for a single taxpayer is $6,200 and that each exemption claimed is worth $3,950.

Question description

Kendra Thayer, who is single, goes to graduate school part-time and works as a waitress at the Backwater Grill in New York. During the past year (2014), her gross income was $18,900 in wages and tips. She has decided to prepare her own tax return because she cannot afford the services of a tax expert. After preparing her return, she comes to you for advice. Here’s a summary of the figures she has prepared thus far:

Gross income:
 Wages $10,600
 Tips +8,300
Adjusted gross income (AGI) $18,900
Less: Itemized deductions -2,500
$16,400
Less: Standard deduction -6,200
Taxable income $10,200

Kendra believes that if an individual’s income falls below $20,350, the federal government considers him or her “poor” and allows both itemized deductions and a standard deduction.

  1. Calculate Kendra Thayer’s taxable income, being sure to consider her exemption. Assume that the standard deduction for a single taxpayer is $6,200 and that each exemption claimed is worth $3,950.

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