Cole earned $3,000 in wages, incurred $1,000 in unreimbursed employee business expenses, paid $400 as interest on a student loan, and contributed $100 to a charity. What is Cole's adjusted gross income?
Choice "C" is correct. Adjusted Gross Income (AGI) is gross income less adjustments or deductions to arrive at AGI. $3,000 in wages is part of gross income. The only adjustment listed is $400 in student loan interest, resulting in an AGI of $2,600.
Choice "d" is incorrect. Student loan interest is a deduction to arrive at AGI.
Choice "a" is incorrect. Charitable contributions are itemized deductions subtracted from AGI.
Choice "b" is incorrect. Unreimbursed employee business expense is an itemized deduction subtracted from AGI.
