Homework Problem III daughters (age 15, an 18 vear old freshman at GCC and the o
ID: 2510309 • Letter: H
Question
Homework Problem III daughters (age 15, an 18 vear old freshman at GCC and the oldest is 23 and a ful1-time qraduate student at AS Wst) have income, expenses, and other expenditures for the year as follows. They file a joint return. Barack and Michelle Obama*, a married couple with three $80,000 27,000 Salaries (60,000 and $20,000) Speaking fees earned Interest income from: 1,450 2, 600 50,000 20,000 3,000 4,000 6,000 1,200 7,200 2,000 3,600 2,800 10,000 5,000 1,400 1,000 Bank account Maricopa Community College bonds Inheritance received Gift from parents Contribution to Traditional I.R.A. Arizona Cardinals season tickets Food Credit card interest Interest expense on home mortgage Property taxes paid Charitable contributions Tuition and books paid to: GCC ASU Federal income tax withheld State income tax withheld State income tax refund (received in current year for prior year) Compute the amount of: a) taxable income b) income taxes, and c) amount of tax to be paid (refunded)Explanation / Answer
a). Calculation of Taxable income:
Income from Salary $80,000
Interest Earned from Bank $1,450
Total $81,450
Less: Expenses
Contriibution to IRA $3,000
Credit Card Interest $1,200
Interst Expense on home mortgage $7,200
Property Tax Paid $2,000
Charitable Contributions $3,600
Tuition and Books (paid to gcc) $2,800
Total $19,800
Taxable Income = $61,650
***Important Notes
b.) Calculation of Income Tax:
Taxable Income = $61,650
Tax Bracket for Married Couples:
Income upto $9,525 it is 10% = 9525 * 10% = $952.5
Income from $9,525 to $77400 = ($61,650-$9,525) * 12% = $6,255
Total Income Tax Expense = $7,207.5
c.)
Calculation of Tax to be paid (refunded)
Income Tax Expense = $7,207.50
Less: federal Tax witheld =$5,000
Less: State Income Tax witheld = $1400
Net Tax to be paid..................= $807.50
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