Steve Had A Gross Income Of $\$ 86,100$ In 2009. When Filing His Federal Income Tax Return, He Took The Standard Deduction Of $\$ 5,700$[/tex\], Claimed Only Himself As An Exemption For $\$ 3,650$, And Did Not Have

Feb 25, 2025 by ADMIN 221 views

**Understanding Steve's Tax Return: A Mathematical Analysis**

Introduction

In this article, we will delve into the world of taxation and explore the concept of gross income, standard deduction, and exemptions. We will use the example of Steve, who had a gross income of $86,100 in 2009, to illustrate how these concepts work. By the end of this article, readers will have a better understanding of how tax returns are calculated and the factors that affect an individual's tax liability.

Gross Income

Gross income refers to the total amount of money earned by an individual from all sources, including wages, salaries, tips, and self-employment income. In Steve's case, his gross income for 2009 was $86,100. This amount includes all the money he earned from his job, as well as any other sources of income he may have had.

Standard Deduction

The standard deduction is a fixed amount that is subtracted from an individual's gross income to reduce their taxable income. In 2009, the standard deduction was $5,700. This means that Steve could subtract $5,700 from his gross income of $86,100 to arrive at his taxable income.

Exemptions

Exemptions are amounts that are subtracted from an individual's taxable income to reduce their tax liability. In Steve's case, he claimed only himself as an exemption for $3,650. This means that he could subtract $3,650 from his taxable income to further reduce his tax liability.

Calculating Taxable Income

To calculate Steve's taxable income, we need to subtract the standard deduction and exemption from his gross income. This can be done using the following formula:

Taxable Income = Gross Income - Standard Deduction - Exemption

Plugging in the numbers, we get:

Taxable Income = $86,100 - $5,700 - $3,650 Taxable Income = $76,750

Tax Liability

Once we have calculated Steve's taxable income, we can determine his tax liability. However, this requires knowledge of the tax rates and brackets in effect for 2009. For the sake of this example, let's assume that Steve's taxable income falls within the 25% tax bracket.

Using a tax calculator or table, we can determine that Steve's tax liability would be approximately $19,187.50.

Conclusion

In conclusion, Steve's tax return for 2009 was calculated by subtracting the standard deduction and exemption from his gross income. This resulted in a taxable income of $76,750, which fell within the 25% tax bracket. By understanding the concepts of gross income, standard deduction, and exemptions, readers can better navigate the complex world of taxation.

Mathematical Formulas

Taxable Income = Gross Income - Standard Deduction - Exemption
Tax Liability = Taxable Income x Tax Rate

Tax Rates and Brackets

For the sake of this example, let's assume that the tax rates and brackets for 2009 were as follows:

10% on the first $8,350
15% on the next $29,750
25% on the next $38,600
28% on the next $10,150
33% on the next $10,150

Tax Tables

For the sake of this example, let's assume that the tax tables for 2009 were as follows:

Taxable Income	Tax Liability
$0 - $8,350	10%
$8,351 - $38,100	15%
$38,101 - $76,750	25%
$76,751 - $87,850	28%
$87,851 - $98,000	33%

Introduction

In our previous article, we explored the concept of gross income, standard deduction, and exemptions using the example of Steve's tax return for 2009. In this article, we will answer some of the most frequently asked questions about tax returns, using Steve's example to illustrate the concepts.

Q: What is gross income?

A: Gross income refers to the total amount of money earned by an individual from all sources, including wages, salaries, tips, and self-employment income. In Steve's case, his gross income for 2009 was $86,100.

Q: What is the standard deduction?

A: The standard deduction is a fixed amount that is subtracted from an individual's gross income to reduce their taxable income. In 2009, the standard deduction was $5,700. This means that Steve could subtract $5,700 from his gross income of $86,100 to arrive at his taxable income.

Q: What is an exemption?

A: An exemption is an amount that is subtracted from an individual's taxable income to reduce their tax liability. In Steve's case, he claimed only himself as an exemption for $3,650. This means that he could subtract $3,650 from his taxable income to further reduce his tax liability.

Q: How do I calculate my taxable income?

A: To calculate your taxable income, you need to subtract the standard deduction and exemption from your gross income. This can be done using the following formula:

Taxable Income = Gross Income - Standard Deduction - Exemption

Q: What is tax liability?

A: Tax liability refers to the amount of taxes that an individual owes to the government. In Steve's case, his tax liability would be approximately $19,187.50, assuming that his taxable income falls within the 25% tax bracket.

Q: How do I determine my tax bracket?

A: To determine your tax bracket, you need to look at the tax rates and brackets in effect for the year. For the sake of this example, let's assume that the tax rates and brackets for 2009 were as follows:

10% on the first $8,350
15% on the next $29,750
25% on the next $38,600
28% on the next $10,150
33% on the next $10,150

Q: What is the difference between gross income and taxable income?

A: Gross income refers to the total amount of money earned by an individual from all sources, while taxable income refers to the amount of income that is subject to taxation. In Steve's case, his gross income was $86,100, while his taxable income was $76,750.

Q: Can I claim more than one exemption?

A: No, you can only claim one exemption per tax return. In Steve's case, he claimed only himself as an exemption for $3,650.

Q: What happens if I don't claim my exemption?

A: If you don't claim your exemption, you will not be able to subtract the exemption amount from your taxable income. This means that you will pay more taxes than you would have if you had claimed your exemption.

Q: Can I claim a standard deduction if I itemize my deductions?

A: No, you cannot claim a standard deduction if you itemize your deductions. If you itemize your deductions, you will need to calculate your deductions separately and subtract them from your gross income.

Conclusion

Frequently Asked Questions

Q: What is gross income?
A: Gross income refers to the total amount of money earned by an individual from all sources, including wages, salaries, tips, and self-employment income.
Q: What is the standard deduction?
A: The standard deduction is a fixed amount that is subtracted from an individual's gross income to reduce their taxable income.
Q: What is an exemption?
A: An exemption is an amount that is subtracted from an individual's taxable income to reduce their tax liability.
Q: How do I calculate my taxable income?
A: To calculate your taxable income, you need to subtract the standard deduction and exemption from your gross income.
Q: What is tax liability?
A: Tax liability refers to the amount of taxes that an individual owes to the government.
Q: How do I determine my tax bracket?
A: To determine your tax bracket, you need to look at the tax rates and brackets in effect for the year.
Q: What is the difference between gross income and taxable income?
A: Gross income refers to the total amount of money earned by an individual from all sources, while taxable income refers to the amount of income that is subject to taxation.
Q: Can I claim more than one exemption?
A: No, you can only claim one exemption per tax return.
Q: What happens if I don't claim my exemption?
A: If you don't claim your exemption, you will not be able to subtract the exemption amount from your taxable income.
Q: Can I claim a standard deduction if I itemize my deductions?
A: No, you cannot claim a standard deduction if you itemize your deductions.