Sandra pays $30,000 in alimony. What amount of her income is subject to taxation?

The correct amount of Sandra's income subject to taxation depends on how alimony payments are treated under current tax law. Prior to the Tax Cuts and Jobs Act (TCJA) enacted in 2017, alimony payments were deductible for the payer and considered taxable income for the recipient. However, for divorces finalized after December 31, 2018, the payer can no longer deduct alimony payments, and the recipient does not include them as taxable income.

Given that Sandra pays $30,000 in alimony and if this is related to a divorce finalized after that date, the $30,000 would not be included as taxable income. Consequently, only Sandra’s other income sources would be taxed.

In this case, the correct answer indicates that $120,000 represents her total income prior to considering the alimony payment. Assuming her taxable income includes other sources of income, the amount of her income subject to taxation would be made up of whatever her total earnings are outside of the alimony. Therefore, the possibility of $120,000 is substantiated if her overall income includes wages, investment income, or other earnings that are indeed subject to tax.

Thus, it’s crucial to identify when the alimony was paid, since the tax