The Tax Formula for Individuals, Filing Status and TaxComputation (LO 1.3, 1.5, 1.6, 1.7)
Diego, age 28, married Dolores, age 27, in 2017. Their salariesfor the year amounted to $94,000 and they had interest income of$3,700. Diego and Dolores' deductions for adjusted gross incomeamounted to $8,240; their itemized deductions were $11,050; theyclaimed two exemptions on their return; and, they filed a jointreturn.
Table for the standard deduction
Filing Status 2017 Standard Deduction Single $ 6,350 Married, filing jointly 12,700 Married, filing separately 6,350 Head of household 9,350 Qualifying widow(er) 12,700
Click here to access the tax tables.
a. What is the amount of their adjusted grossincome?
$
b. In order to minimize taxable income, Diegoand Dolores will _______ in the amount of $__________
c. What is the amount of their taxableincome?
$
d. What is their tax liability for 2017?
$
The Tax Formula for Individuals, Filing Status and TaxComputation (LO 1.3, 1.5, 1.6, 1.7)
Diego, age 28, married Dolores, age 27, in 2017. Their salariesfor the year amounted to $94,000 and they had interest income of$3,700. Diego and Dolores' deductions for adjusted gross incomeamounted to $8,240; their itemized deductions were $11,050; theyclaimed two exemptions on their return; and, they filed a jointreturn.
Table for the standard deduction
| ||||||||||||||||||
Click here to access the tax tables.
a. What is the amount of their adjusted grossincome?
$
b. In order to minimize taxable income, Diegoand Dolores will _______ in the amount of $__________
c. What is the amount of their taxableincome?
$
d. What is their tax liability for 2017?
$
Related questions
Jonathan is a 35-year-old single taxpayer with adjusted grossincome in 2017 of $46,300. He uses the standard deduction and hasno dependents.
Table for the standard deduction
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Click here to access the tax tables.
a. Calculate Jonathan's taxable income.
$
b. When you calculate Jonathan's tax liabilityare you required to use the tax tables or the tax rateschedule?
c. What is Jonathan's tax liability?
âLauren, a singleâ taxpayer, had the following income and deductions for the tax year 2017â:
Requirement a. Compute Lauren's taxable income and federal tax liability for 2017.(Calculate the tax using the tax rate schedule. Do not round interim tax calculations. Round the amount entered into the cell to the nearest wholeâdollar.)
Requirement b. Compute Lauren's marginal, average, and effective tax rates. â(Round your answers to two decimalâ places, X.XX%.)
Requirement c. For tax planningâ purposes, which of the three rates in Part b is the mostâ important?
| INCOME: | Salary | $90,000 |
| Business Income | 24,000 | |
| Interest income from bonds | 6,000 | |
| Tax-exempt bond interest | 4,400 | |
| TOTAL INCOME | $124,400 | |
| DEDUCTIONS: | Business expenses | $11,500 |
| Itemized deductions | 10,000 | |
| Personal exemption | 4,050 | |
| TOTAL DEDUCTIONS | $25,550 |
| PERSONAL AND DEPENDENCY EXEMPTION AND PHASE-OUTS | ||
| Personal and dependency exemption | $4,050 | |
| Phase-outs for high income taxpayers: | ||
| Personal and dependency exemptions are reduced by 2% for each $2,500 increment (or part of increment) | ||
| for AGI above the threshold amount. | ||
| Itemized deductions are reduced by 3% for each dollar of AGI above the threshold amounts (taxpayers cannot | ||
| lose more than 80% of their allowable itemized deductions). | ||
| For both provisions, the AGI threshold amounts are: | ||
| Married individuals filing joint returns and surviving spouses | $313,800 | |
| Heads of households | 287,650 | |
| Unmarried individuals (other than surviving spouses and heads of households) | 261,500 | |
| Married individuals filing separate returns | 156,900 | |
| STANDARD DEDUCTION | |||
| Filing Status | |||
| Married individuals filing joint returns and surviving spouses | $12,700 | ||
| Heads of households | 9,350 | ||
| Unmarried individuals (other than surviving spouses and heads of households) | 6,350 | ||
| Married individuals filing separate returns | 6,350 | ||
| Additional standard deduction for the aged and the blind | |||
| Individual who is married and surviving spouses | 1,250 | * | |
| Individual who is unmarried and not a surviving spouse | 1,550 | * | |
| Taxpayer claimed as dependent on another taxpayerâs return: Greater of (1) earned income plus $350 or (2) $1,050. | |||
| * These amounts are $2,500 and $3,100, respectively, for a taxpayer who is both aged and blind. | |||
Single
If taxable income is: The tax is:
Not over $9,325. . . . . . . . . . . . . . . . . . . .10% of taxable income.
Over $9,325 but not over $37,950. . . . . . . . .$932.50 + 15% of the excess over $9,325.
Over $37,950 but not over $91,900. . . . . . .$5,226.25 + 25% of the excess over $37,950.
Over $91,900 but not over $191,650. . . . . .$18,713.75 + 28% of the excess over $91,900.
Over $191,650 but not over $416,700. . . . .$46,643.75 + 33% of the excess over $191,650.
Over $416,700 but not over $418,400. . . . .$120,910.25 + 35% of the excess over $416,700.
Over $418,400. . . . . . . . . . . . . . . . . . . . .$121,505.25 + 39.6% of the excess over $418,400.
