A married couple with no children has the following in year 2012: The husband ha
ID: 2716235 • Letter: A
Question
A married couple with no children has the following in year 2012:
The husband has an AGI of $65,000 and allowable itemized deductions of $10,800.
The wife has an AGI of 58,000, and allowable itemized deductions of $800.
Year 2012 federal tax brackets, personal exemption and standard deductions are given below.
2012 Tax Rates & Tax Brackets
Tax Rate
Single
Married Filing Joint
Married Filing Separate
Head of Household
10%
Up to $8,700
Up to $17,400
Up to $8,700
Up to $12,400
15%
$8,701 – $35,350
$17,401 – $70,700
$8,701 – $35,350
$12,401 – $47,350
25%
$35,351 – $85,650
$70,701 – $142,700
$35,351 – $71,350
$47,351 – $122,300
28%
$85,651 – $178,650
$142,701 – $217,450
$71,351 – $108,725
$122,301 – $198,050
33%
$178,651 – $388,350
$217,451 – $388,350
$108,726 – $194,175
$198,051 – $388,350
35%
Over $388,350
Over $388,350
Over $194,175
Over $388,350
Standard Deduction:
$5,950 $11,900 $5,950 $8,700
Personal Exemption: $3,800/person
(a) Compute the couple’s 2012 federal income tax, if they file their federal taxes jointly
(b) Compute the couple’s 2012 federal income tax, if they file their federal taxes separately
Tax Rate
Single
Married Filing Joint
Married Filing Separate
Head of Household
10%
Up to $8,700
Up to $17,400
Up to $8,700
Up to $12,400
15%
$8,701 – $35,350
$17,401 – $70,700
$8,701 – $35,350
$12,401 – $47,350
25%
$35,351 – $85,650
$70,701 – $142,700
$35,351 – $71,350
$47,351 – $122,300
28%
$85,651 – $178,650
$142,701 – $217,450
$71,351 – $108,725
$122,301 – $198,050
33%
$178,651 – $388,350
$217,451 – $388,350
$108,726 – $194,175
$198,051 – $388,350
35%
Over $388,350
Over $388,350
Over $194,175
Over $388,350
Explanation / Answer
Answer:(a)
Adjusted gross income $ 123000
Deductions from AGI:
The greater of:
Itemized deductions $ 11600
or
Standard deduction $ 11900 (11900)
Personal and dependency exemptions (2 x $3,800) (7600)
Taxable income $103500
Income tax=70700*15%+(103500-70700)*25%=10605+8200=18805
Answer:(b)
Husband:
Adjusted gross income $ 65000
Deductions from AGI:
The greater of:
Itemized deductions $ 10800
or
Standard deduction $ 5950 (10800)
Personal and dependency exemptions (1 x $3,800) (3800)
Taxable income $ 50400
Income tax:35350*15%+(50400-35350)*25%=5302.5+3762.5=9065
Wife:
Adjusted gross income $ 58000
Deductions from AGI:
The greater of:
Itemized deductions $ 800
or
Standard deduction $ 5950 (5950)
Personal and dependency exemptions (1 x $3,800) (3800)
Taxable income $48250
Income tax:35350*15%+(48250-35350)*25%=5302.5+3225=8527.5
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