Question

Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds. Marc contributed $2,500 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,500. Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $3,500 in federal income taxes withheld from their paychecks during the course of the year. (Use the tax rate schedules.)

a. What is Marc and Michelle’s gross income?

    

b. What is Marc and Michelle’s adjusted gross income?

    

c. What is the total amount of Marc and Michelle’s deductions from AGI?

    

d. What is Marc and Michelle’s taxable income?

    

e. What is Marc and Michelle’s taxes payable or refund due for the year?

    

Answer 1

	Marc	Michelle	Total
Salaries	$      64,000	$      12,000	$      76,000
Add : Interest : municipal bonds			$            350
Add : Interest : corporate bonds			$            500
		Gross Income	$      76,850
Gross Income			$      76,850
Less :
Alimony to a prior spouse			$       (1,500)
Contribution to retirement acc.			$       (2,500)
		Adjusted gross income	$      72,850
Total amount of Marc and Michelle’s deductions from AGI
alimony to a prior spouse			$         1,500
Contribution to retirement acc.			$         2,500
		Total	$        4,000
Adjusted gross income			$      72,350
Less :
Standard Deduction : married filing jointly			$     (24,000)
		Taxable Income	$      48,350