Calculate the 2017 tax liability and the tax or refund due for each situation: M

Question

Calculate the 2017 tax liability and the tax or refund due for each situation:

Mark is single with no dependents and has a taxable income of $60,000. He has $10,700 withheld from his salary for the year.

Harry and Linda are married and have taxable income of $60,000. Harry has $5,250 withheld from his salary. Linda makes estimated tax payments totaling $3,000.

Aspra is single. His 20-year-old son, Calvin, lives with him throughout the year. Calvin pays for less than one-half of his support and his earned income for the year is $3,000. Aspra pays all costs of maintaining the household. His taxable income is $60,000. Aspra's withholdings total $9,600.

Randy and Raina are married. Because of marital discord, they are not living together at the end of the year, although they are not legally separated or divorced. Randy's taxable income is $25,000, and Raina's is $60,000. Randy makes estimated tax payments of $3,500, and Raina has $9,500 in tax withheld from her salary.

Explanation / Answer

a. Mark is single with no dependents and has a taxable income of $60,000. He has $10,700 withheld from his salary for the year:-

Mark's 2017 tax is $10,739 {$5,226.25+[25%x($60,000-$37,950)]}.He has a tax due of $39 ($10,739-$10,700).

b. Harry and Linda are married and have taxable income of $60,000. Harry has $5,250 withheld from his salary. Linda makes estimated tax payments totaling $3,000:-

Harry's and Linda's 2017 tax filing a joint return is $8,068 {$1,865 + [15% x ($60,000 - $18,650)]}. They receive a refund of $182 ($8,068 - $5,250 - $3,000).

c. Aspra is single. His 20-year-old son, Calvin, lives with him throughout the year. Calvin pays for less than one-half of his support and his earned income for the year is $3,000. Aspra pays all costs of maintaining the household. His taxable income is $60,000. Aspra's withholdings total $9,600.

Aspra qualifies to file as head of household. Aspra's 2017 tax is $9,253 {$6,952.50 + [25% x ($60,000 - $50,800)]}. Aspra will receive a refund of $347 ($9,600 - $9,253). Note: Calvin qualifies as a dependent as a qualifying relative.

d. Randy and Raina are married. Because of marital discord, they are not living together at the end of the year, although they are not legally separated or divorced. Randy's taxable income is $25,000, and Raina's is $60,000. Randy makes estimated tax payments of $3,500, and Raina has $9,500 in tax withheld from her salary:-

If Randy and Raina can get together and file a joint return, their tax on $85,000 in 2017 will be $12,728 {$10,452.50 + [25% x ($85,000 - $75,900)]}. If they each file separately, Randy's tax will be $3,284 {$932.50 + [($25,000 - $9,325) x 15%) and Raina's tax will be $10,739 [$5,226.25 + [25% x ($60,000 - $37,950)]}. Their total 2017 tax filing separately is $14,023 ($10,739 + $3,284), which is $1,295 ($12,728 - $14,023) more tax than they would pay on a joint return.

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