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26 November, 08:25

Bianca and Dave are a married couple filing a joint tax return. They have a combined gross income of $81,031 and claim four exemptions. They can make an adjustment of $2,914 for business expenses, an adjustment of $1,939 for business losses, a deduction of $4,140 for medical expenses, an adjustment of $4,825 for contributions to their retirement fund, and a deduction of $2,420 for charitable donations. If exemptions are worth $3,650 apiece and the standard deduction for a joint return is $8,350, what is their total taxable income?

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  1. 26 November, 10:27
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    The correct answer is:

    $41,843.

    Explanation:

    We start with their gross salary, $81,031.

    Taking off the adjustment of $2,914 for business expenses leaves us with

    81031-2914 = $78,117.

    Taking off the adjustment of $1939 for business losses leaves us with

    78117-1939 = $76,178.

    Taking off the deduction of $4140 for medical expenses leaves us with

    76178-4140 = $72,038.

    Taking off the adjustment of $4825 for contributions to retirement leaves us with

    72038-4825 = $67,213.

    Taking off the deduction of $2420 for charitable donations leaves us with

    67213-2420 = $64,793.

    Four exemptions at $3650 apiece is 4 (3650) = $14,600. Taking this off leaves us with

    64793-14600 = $50,193.

    Lastly, taking off the standard deduction of $8350 leaves us with

    50193-8350 = $41,843.
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