Jeremy earned $140,000 in salary and $1,000 in interest income during the year.
ID: 2579531 • Letter: J
Question
Jeremy earned $140,000 in salary and $1,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $14,500 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the tax rate schedules.). (Do not round intermediate calculations. Round "Income tax liability" to 2 decimal places.)
Tax Rate Schedule: https://ezto-cf-media.mheducation.com/Media/Connect_Production/bne/accounting/spilker_9e/taxrateschedulea.jpg
a:. Use the 2017 tax rate schedules to determine Jeremy’s taxes due.
b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $6,500. What is Jeremy’s tax liability including the tax on the capital gain?
c. Assume the original facts except that Jeremy had only $3,500 in itemized deductions. What is Jeremy’s total income tax liability?
DescriptionAmount
(1)Gross income$141,000
(2)For AGI deductions0
(3)Adjusted gross income
$141,000
(4)Standard deduction
(5)Itemized deductions
(6)
(7)Personal and dependency exemptions
(8)Taxable income
income tax liability
Description Amount (1) Gross income (2) For AGI deductions 0 (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) Greater of standard deductions or itemized deductions (7) Personal and dependency exemptions (8) Taxable income Income tax liabilityExplanation / Answer
Assuming he is married separately
1.
Gross income
$141,000
Qualified plan contributions
-
$0
Adjusted gross income
=
$141,000
Standard/Itemized deductions
-
$14,500
Personal exemptions
-
$8,100
Taxable income
=
$118,400
Tax liability before credits
$26,826
Child tax credits
-
$0
Estimated tax liability
=
$26,826
2.
Gross income
$147,500
Qualified plan contributions
-
$0
Adjusted gross income
=
$147,500
Standard/Itemized deductions
-
$14,500
Personal exemptions
-
$8,100
Taxable income
=
$124,900
Tax liability before credits
$29,030
Child tax credits
-
$0
Estimated tax liability
=
$29,030
3.
Gross income
$141,000
Qualified plan contributions
-
$0
Adjusted gross income
=
$141,000
Standard/Itemized deductions
-
$3,500
Personal exemptions
-
$8,100
Taxable income
=
$129,400
Tax liability before credits
$30,456
Child tax credits
-
$0
Estimated tax liability
=
$30,456
Gross income
$141,000
Qualified plan contributions
-
$0
Adjusted gross income
=
$141,000
Standard/Itemized deductions
-
$14,500
Personal exemptions
-
$8,100
Taxable income
=
$118,400
Tax liability before credits
$26,826
Child tax credits
-
$0
Estimated tax liability
=
$26,826
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