In 2016, Joan is single and a homeowner who incurs property taxes on her home of $2,000, makes charitable contributions of $500, and pays mortgage interest of $6,000. Joan's adjusted gross income is $32,000. What is her taxable income?
a. $19,450
b. $23,500
c. $32,000
d. $25,700
Question 1
Remember the facts from the last question:
In 2016, Joan is single and a homeowner who incurs property taxes on her home of $2,000, makes charitable contributions of $500, and pays mortgage interest of $6,000. Joan's adjusted gross income is $32,000.
Assume the same facts as above, but Joan is not a homeowner, so she has no property tax or mortgage interest. Instead, she pays rent of $800 per month for her apartment. What is her taxable income now?
a. $21,900
b. $17,850
c. $25,700
d. $21,650
Question 2
Jesse supports three people, all of whom have gross income of less than $4,050; Tina, an unrelated child who lives with him; his cousin Judy, who lives in another state; and his daughter Vicki, who lives in her own home. Assume all other tests not mentioned are met. How many dependency exemptions, if any, may Jesse claim?
a. 0
b. 1
c. 2
d. 3