Question 7 of 25 Gretchen made 56,750 last year. She paid 1,200 in student loan interest and made a 3,000 contribution to her IRA.On her federal tax return, she will claim 56,750 to be her: A. Taxable income B. AGI C. Gross income D. Standard deduction

To determine the correct answer, we need to understand the definitions of the terms provided in the options.<br /><br />A. Taxable income: This is the amount of income that is subject to taxation after deductions and exemptions are applied.<br /><br />B. AGI (Adjusted Gross Income): This is the gross income minus certain adjustments, such as student loan interest and IRA contributions.<br /><br />C. Gross This is the total income earned before any deductions or adjustments are applied.<br /><br />D. Standard deduction: This is a fixed amount that can be deducted from gross income to reduce taxable income.<br /><br />In this case, Gretchen made $56,750 last year and paid $1,200 in student loan interest and made a $3,000 contribution to her IRA amounts are considered adjustments to gross income.<br /><br />To calculate Gretchen's AGI, we need to subtract the student loan interest and IRA contribution from her gross income:<br /><br />Gross income: $56,750<br />Student loan interest: -$1,200<br />IRA contribution: -$3,000<br />AGI: $56,750 - $1,200 - $3,000 = $52,550<br /><br />Therefore, the correct answer is B. AGI.