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Jan and Sam have all of their 2018 tax documents ready to bring to George to prepare their return. These documents inclu...

Jan and Sam have all of their 2018 tax documents ready to bring to George to prepare their return. These documents include a W-2 for Jan ($52,300), a W-2 for Sam ($48,700), a state tax refund of $475, canceled debt income of $1,800 for Jan, and state lottery winnings of $2,000. They never itemize deductions. What will be their total on Form 1040, line 7? Select one: a. $105.275 b. $104,800 c. $103,275 d. $103,000?

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Answer #1

Answer:

Correct answer is:

$104,800

Explanation:

Line 7 of Form 1040, is adjusted gross income:

AGI for Jan and Sam = Salary Income + Cancelled debt income + Lottery winnings = 52300 + 48700 + 1800 + 2000 = $104,800

As they never itemize deductions, state tax refund is not taxable.

Hence option b is correct and other options a, c and d are incorrect.

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