During the year, justin received gross wages of $30,800 reported on his form w-2 and taxable interest of $230 reported on a form 1099-int. he can claim one exemption (assume $10,150 per exemption). what will be his taxable income reported on line 6 of form 1040-ez?

$20,880

Explanation:

Taxable income is the amount of gross or total income of an individual or a company that is left to be taxed by the government after all the deductions or exemptions that are allowed my the government for that year have been deducted.

A tax exemption is the right given to a tax payer by the government to deduct all or some income from their gross income in order to the taxable income of the tax payer.

From the question, Justin is has two sources of income which are wages of $30,800 and taxable interest of $230. To arrive at his gross or total income, we add the two income as follows:

Gross Income =$30,800 + $230

                       = $31,030

It is further assumed in the question that Justine is entitled to $10,150 per exemption, i.e. for each income. However, it is clearly stated that he can only claim just one exemption of $10,150 not two (i.e. not $10,150 + $10,150 =  $20,300). Therefore, the one exemption of $10,150 which he can claim will be deducted from his Gross income calculated above to arrive at his taxable income given below:

Gross Income =$30,800 - $10,150

                       = $20,880

Therefore, $20,880 will be Justin's taxable income that will be reported on line 6 of Form 1040-EZ.

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