 Hello and welcome to the session. In this session we are going to discuss the following question and the question says that Dona works as a manager. Last year she earned $96,480 in addition. She earned $630 interest on her savings. She contributed $540 and $700 to her health saving account and retirement plan respectively. Itemized reductions are as follows. She paid property tax of $1,400. She also had medical expenses of $350 and she paid a local tax of $1,534. She also claimed an exemption of $4,535 for her son, decided by the taxing authority, calculate her taxable income. Now let us start with the solution of the given question. To calculate Dona's taxable income, we will follow the following steps. In the first step we will calculate total income. Dona's annual earnings are given as $96,480. In addition to this she also earned savings interest which is given as $630. So her total income will be given by annual earnings plus savings interest and this is equal to $96,480 plus $630 and this is equal to $97,110. So her total income is given by $97,110. Next we shall calculate adjusted gross income. We know that adjusted gross income is given by total income minus specific deductions. Here she made a contribution of $540 to her health saving account and $700 in retirement plan. So we will subtract these amounts from total income so adjusted gross income will be given by $97,110 minus $540 minus $700 and this is equal to $97,110 minus $1,240 and this is equal to $95,870. So adjusted gross income is equal to $95,870. Then we shall calculate deductions and subtract it from adjusted gross income. Here we are given itemized deductions and it is given that she paid property tax of $1,400. She also had medical expenses of $350 and she paid a local tax of $1,534. So total deduction will be given by property tax plus medical expenses plus local tax and this is equal to $1,400 plus $350 plus $1,534. This is equal to $3,284. Now taxable income is equal to adjusted gross income minus deductions. So this is equal to $95,870 minus $3,284 and this is equal to $92,586. And then we subtract exemptions from the amount calculated in the previous step then the obtained amount will be the taxable income. Here we are given that Dona claimed $4,535 as an exemption for her son. So exemptions will be given by $4,535. Thus taxable income is given by $92,586 minus exemptions. So this is equal to $92,586 minus $4,535 and this is equal to $88,051. So we can say that Dona's taxable income is $88,051. This is the required answer. This completes our session. Hope you enjoyed this session.