Which of the following is the correct method for starting with gross income and computing taxable income?
A) Subtract the standard deduction and exemptions
B) Add the itemized deductions and subtract the exemptions
C) Subtract IRA contributions and add exemptions
D) Subtract adjustments, deductions, and exemptions

Question

Quizplus · Accepted Answer

The correct method for starting with gross income and computing taxable income is to subtract adjustments, deductions, and exemptions. This is because adjustments, such as contributions to a traditional IRA or student loan interest, reduce your taxable income before deductions and exemptions are applied. Deductions, such as charitable contributions or mortgage interest, are then subtracted from the adjusted gross income, followed by exemptions for yourself and any dependents you claim.

Which of the Following Is the Correct Method for Starting