Question

Brie Larson owns her own sole proprietorship called C'est Cheese. During the year, because C'est Cheese reported net income of $52,416, Brie Larson owes $7,406 in self-employment taxes. During the year, she also earned $32,870 of wages, and made a $5,000 contribution to a traditional IRA. She also paid mortgage interest of $3,122, and paid property taxes of $2,521 during the year. Assuming she has no other items to report on her income tax return, her correct Deductions for AGI is 5000

Answer 1

First of all AGI means Adjusted Gross Income in which every incomes are calculated which occurs in this year such as bonus, tips, gambling etc.

So as per the above question C'est Cheese reported net income $52,416 including with another income from wages is $32,870

so the net income is $52,416+$32,870=$85,286

Larson owes $7,406 in self employment tax

Made $5,000 to IRA, Mortgage Interest $3,122, Property Tax $2,521

so the deduction is $7,406+$5,000+$3,122+$2,521=$18,049

Her Correct deduction for AGI is depends on $85,286-18,049=$67,237