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Compute Adjusted Gross Income (AGI) for Amir

Adjusted Gross Income. Amir, who is single, retired from his job this year. He received a salary of $25,000 for the portion of the year that he worked, tax-exempt interest of $3,000, and dividends from domestic corporations of $2,700. On September 1, he began receiving monthly pension payments of $1,000 and Social Security payments of $600. Assume an exclusion ratio of 40% for the pension. Amir owns a duplex that he rents to others. He received rent of $12,000 and incurred $17,000 of expenses related to the duplex. He continued to actively manage the property after he retired from his job. Compute Amir's adjusted gross income.

Solution Preview

See attached file.

Using references to line numbers on Form 1040, following is the input:

1. Line 7 Wages = $25000

2. Line 8b TE interest = $3000, not taxable for federal purposes

3. Line ...

Solution Summary

The solution explains the amount of each item that will be taxable and reportable on the return and lists the line number where it will be shown. AGI is calculated including the taxable portion of social security.