Beverly Jones is 26 years old, single, lives in an apartment, and has no depende

Question

Beverly Jones is 26 years old, single, lives in an apartment, and has no dependents. Last year she earned $37,300 as a sales assistant for Precision Business Instruments; $2,611 of her wages were withheld for federal income taxes. In addition, she had interest income of $161. The standard deduction in 2008 was $5,700 for single. The exemption was claimed to be worth $3,650. The taxable rate is shown below: EXHIBIT 3.3 ??? Sample Tax Rate Schedules Tax rates levied on personal income vary with the amount of reported taxable income and the taxpayer's filing status. 2008 Tax Rate Schedules Schedule X-If your filing status is Single If your taxable income is: The tax is: Over- But not over- of the amount over- 0 $8,025 _ _ _ _ _10% $0 8,025 32,550 $802.50 + 15% 8,025 32,550 78,850 4,481.25 + 25% 32,550 78,850 164,550 16,056.25 + 28% 78,850 164,550 357,700 40,052.25 + 33% 164,550 357,700 _ _ _ _ _ 103,791.75 + 35% 357,700 a. Estimate her taxable income. $ b. Estimate her tax liability. Round the answer to the nearest cent. (Hint: Use the tax rate schedules given in Exhibit 3.3 to determine her tax liability.) $ c. Estimate her tax refund or tax owed. Round the answer to the nearest cent.

Explanation / Answer

Last year she earned =$37,300 Amount of her wages were withheld for federal income taxes=$2,611 interest income=$161 The standard deduction in 2008 was for single= $5,700 The exemption was claimed to be worth =$3,650 a.Taxable Income=$37,300-$2,611-$5,700+$3,650 =$32639 b.Tax Liability=10% of $32639= $3263.9 c. Tax refund or tax owed= $5,700-$3263.9 = $2436.1

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