Question

Gail is a wealthy widow whose husband died last year. Her dependent daughter lives with her for the entire year. Gail has interest income totaling $ 245,000 and she pays property taxes and home mortgage interest totaling $ 30,000.

Requirement a. What filing status applies to

GailGail​?

GailGail

meets

the requirements of a surviving spouse.​ Thus, she will use the

married filing joint/surviving spouse

rate schedule.

Requirement b. Compute her taxable income and gross tax.

Begin by computing

GailGail​'s

taxable income.

Minus:
Taxable income

Answer 1

Answer -

Information Given -

Gail is a wealthy widow whose husband died last year. Her dependent daughter lives with her for the entire year.

Gail has interest income totaling $245000 and she pays property taxes and home mortgage interest totaling $30000.

.

(a) -- What filing status applies to Gail?

Answer -

Gail qualifies as a surviving spouse. She is eligible to use the joint return rate schedule.

.

(b) -- Compute her taxable income and gross tax.

Answer -

Computation of Gail's Taxable Income and Gross Tax

	Particulars	Calculations	Amount ($)
A.	Adjusted Gross Income -- Interest income	Given in question	245000
B.	Total Itemized deductions -- property taxes and home mortgage interest	Given in question	30000
C.	Taxable Income [A-B]	[$245000 - $30000]	215000
D.	Gross Tax	As per working note - (1)	37949

# Working note-(1) - Calculation of Gross Tax -

Tax Rate	Taxable Income ( $ )	Calculations ($)	Amount ( $ )
10%	0 - 19400	[19400*10%]	1940
12%	19401 - 78950	[(78950-19400)*12%]	7146
22%	78951 - 168400	[(168400-78950 )*22%]	19679
24%	168401 - 321450	[(215000-168400 )*24%]	11184
Total			39949
Less - Child Tax Credit for tax year 2019 [As per U.S. Internal Revenue Service]			(2000)
Gross Tax [$39949 - $2000]			37949