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.
- 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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