Problem regarding self-employment taxes


John, a single taxpayer, had 2013 wages of $75,000 from his job at Big Company, Inc. What is John's AGI if he has the following (and only the following) additional items in 2013?

• Itemized deductions of $12,000

• Exemption amount of $3,900

• Alimony of $10,000 received by John (from his former spouse, Natalia)

• Business income of $5,000 from John's sole proprietorship

Ignore any deduction that may relate to self-employment taxes.

a. $75,000

b. $80,000

c. $85,000

d. $90,000

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Accounting Basics: Problem regarding self-employment taxes
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