Problem 1-9 The Tax Formula for Individuals, Filing Status and Tax Computation,

Question

Problem 1-9
The Tax Formula for Individuals, Filing Status and Tax Computation, Personal and Dependency Exemptions (LO 1.3, 1.5, 1.6, 1.7)

Jonathan is a 35-year-old single taxpayer with adjusted gross income in 2017 of $46,300. He uses the standard deduction and has no dependents.

Table for the standard deduction

Click here to access the tax tables.

a. Calculate Jonathan's taxable income.
$

b. When you calculate Jonathan's tax liability are you required to use the tax tables or the tax rate schedule?

c. What is Jonathan's tax liability?

Filing Status 2017 Standard Deduction Single $ 6,350 Married, filing jointly 12,700 Married, filing separately 6,350 Head of household 9,350 Qualifying widow(er) 12,700

Explanation / Answer

Part A

Jonathan's taxable income = adjusted gross income - standard deduction - personal exemption = 46300-6350-4050 = $35900

Part B

To calculate Jonathan's tax liability, the tax rate schedule is used.

Part C

Tax liability = 932.50 + ((35900-9325)*15%) = 932.50+3986.25 = 4918.75

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