# Calculating Taxable Income

```Taxes_Overview_Beg-Numeracy
Taxes: Beginning Numeracy
Section 2: Gross, Adjusted, and Taxable Income
EL Civics 2011-13
Unit Description:
This unit is divided into three sections with each section having 3 to 5 activities. This
document contains teaching materials for Section 2.
 Section 1: Standard Deductions and Exemptions
 Section 2: Gross, Adjusted, and Taxable Income
 Section 3: Calculating Taxes
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Total Gross Income (S2-A1)
Total Gross Income is all the money you make before taxes. Sometimes people have
more income than from their job. Here are some other kinds of income:
Interest:
money you earn from your savings account
Dividends: money you make from investments in stocks or bonds
(Some people buy very small pieces of a company. These pieces are
called stocks. Every year, people can earn money from that company
for each stock they have. The money they earn is called dividends.)
Alimony:
money you get from your ex-spouse; not for child support
Unemployment: money you get when you get laid off from a job
Social security benefits: money you get from social security if you are elderly
(older) or disabled
For Example, the Thao family made \$27,600 last year. They also got \$677 interest from
their savings account. What is their total gross income?
\$27,600
+ 677
\$28, 277 = total gross income
Find the total gross income for each family:
1. The Mohamud family made \$43,958 last year. They also got \$450 taxable social
security benefits. What is their total gross income? _____________________
2. The Phoung Nyguen made \$32,548 last year. She also got \$2400 in alimony. What
is her total gross income? ____________________
3. Sofia Gonsalez made \$18,456 last year. She also got \$9,789 in unemployment
compensation. What is her total gross income? _______________________
4. Jorge Hernandez made \$37,942 last year. He also got \$546 in dividends from his
stock. What is his total gross income? ______________________________
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You can also subtract some expenses from your total gross income. After you subtract
expenses from your gross income, it is called Adjusted Gross Income. Here are a few
expenses you can subtract from your income.
Educator expenses: money teachers spend to buy things for their students and
classes.
Alimony paid: money you pay to an ex-spouse; not child support
Tuition: money you pay for someone in your family to go to school
Student loan interest: money you pay for interest on a loan for college or training
Find the adjusted gross income for each family below.
1. The Mohamud family’s total gross income is \$44,408. But Ismael is a teacher and
last year he spent \$200 on things for his class. What is their adjusted gross
income? ______________________
2. Phuong Nyguen’s total gross income is \$34,948. She paid \$3500 for tuition for her
child’s preschool. What is her adjusted gross income? ______________________
3. Sofia Gonsalez’ total gross income is \$28,245. She paid \$267 interest on her
student loan. What is her adjusted gross income? ________________________
4. Jorge Hernandez’ total gross income is \$38,488. He paid \$1200 in alimony to his
ex-wife. What is his adjusted gross income? ___________________________
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Taxable Income? (S2-A3)
Part1: What is Taxable Income? Taxable income is the income you must pay taxes on.
Earlier, we learned that we can subtract both the standard deduction and total
exemptions from our adjusted gross income before we calculate taxes. (Remember,
adjusted gross income is all the money you make minus a few possible expenses.) After
we subtract these, we have what is called taxable income. This is the income the
government uses to calculate your taxes.
Filing Status
Single
Standard Deduction
\$5,950
\$8,700
Married Filing
Separately
\$5,950
Married Filing Jointly
\$11,900
Qualifying Widow(er)
\$11,900
Exemption = \$3800
For example: A husband and wife have an adjusted gross income of \$28,000. They are
filing jointly. They have 1 child. What is their taxable income?
Step 1:
\$28,000
- \$11,900
\$16,100
Step 2: \$3800
x 3
\$11,400
Step 3:
Standard Deduction
Total Exemptions
\$16,100
-\$11,400
\$4,700
Taxable Income
Their Taxable Income is \$4,700. This is the amount the government will use to calculate
taxes.
What is your filing status? _____________________________
What is your standard deduction? ___________________________________
What is your total exemptions? ___________________________________
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Part 2: Practice
1. Jamila and her husband have two children. Together they make \$36,000 a year. They
are married filing jointly. How much is their taxable income?
Step 1: Gross income
– standard deduction
\$36,000
-
Step 2: Exemption amount
x number of people
\$3800
x
– exemptions
\$
-
How much is their taxable income? ________________________________
2. Manuel and his wife have three children. Together they make \$32,600 a year.
They are married filing jointly. How much is their taxable income?
Step 1
\$
Step 2
\$
x
-
Step 3
\$
-
How much is their taxable income? ________________________________
3. Moua is a single mother of three children. She is filing as head of household. She
makes \$24,000 a year. How much is their taxable income?
Step 1
\$
-
Step 2
\$
x
Step 3
\$
-
How much is her taxable income? ________________________________
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Calculating Taxable Income (S2)
In a small group, complete each step to calculate the taxable income for each person.
1. Cut out all the cards:
a. Yearly income
b. Filing status
d. Expenses.
2. Put each type of card in a pile upside down. Pick one card from each pile.
3. Fill in the chart with the information from each card for each person in your group.
4. Help each other calculate:
a. Total gross income:
salary
total gross income
- expenses
c. Taxable income:
Step 1: Gross income
– standard deduction
Step 2: Exemption
x number of people
Use the information in the charts below:
Filing Status
Single
Standard Deduction
\$5,950
\$8,700
Married Filing
Separately
\$5,950
Married Filing Jointly
\$11,900
Qualifying Widow(er)
\$11,900
Exemption = \$3800
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- total exemptions
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Group Cards
Filing Status
Married filing jointly
Single
Married filing separately
Exemptions
3 children
5 children
2 children
4 children
Salary
\$28,958
\$46,789
\$18,379
\$31,965
\$625 interest on savings
account
\$6400 unemployment
\$790 social security benefits
Expenses
\$3480 tuition
\$178 student loan interest
\$2000 alimony paid
\$200 teacher educational
expenses
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Group Chart &amp; Calculation Worksheet
Name
Filing Status
Exemptions
Salary
Income
Salary:
_____________
+ ___________
Total Gross Income:
Expenses:
_____________
- ____________
_____________
Standard Deduction:
- ____________
Exemption:
Number of People:
_____________
x ____________