Compute the taxable income for 2021 for Aiden on the basis of the following information. Aiden is married but has not seen or heard from his wife since 2019.

Salary $80,000
Interest on bonds issued by City of Boston 3,000
Interest on CD issued by Wells Fargo Bank 2,000
Cash dividend received on Chevron common stock 2,200
Life insurance proceeds paid upon death of aunt
(Aiden was the designated beneficiary of the policy) 200,000
Inheritance received upon death of aunt 100,000
Jackson (a cousin) repaid a loan Aiden made to him
in 2015 (no interest was provided for) 5,000
Itemized deductions (state income tax, property taxes on
residence, interest on home mortgage,
and charitable contributions) 9,700
Number of dependents (children, ages 17 and 18,
and mother-in-law, age 70) 3
Age 43

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Anthougogo Anthougogo · Answer 1

Aiden's taxable income for 2021 based on the information given is $66,200.

Taxable income is the total income that an individual receives that is non-taxable in a tax year minus the allowed deductions.

Salary = $80,000

Interest on bonds = $3,000 (non-taxable)

Interest on CD = $2,000

Cash dividend = $2,200

Life insurance proceeds = $200,000 (non-taxable)

Inheritance = $100,000 (non-taxable)

Loan repayment to Aiden = $5,000 (non-taxable)

Itemized deductions = $9,700

Standard deduction for head of household = $18,000

Aiden's taxable income = $66,200 ($80,000 + $2,000 + $2,200 - $18,000).

Thus, Aiden's taxable income for 2021 based on the information given is $66,200.

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