Question

1. Assume that your filing status is single, you are not head of household, and you are 35 years old. Compute your refund based on the following data: Your wages are $65,000, and you had $15,000 withheld for federal taxes and $3,000 for state taxes. What is your refund? Answer:__________________
2. Compute your refund using the same data as in a. except you are married and filing jointly, and your spouse is also 35 years old. Answer:_____________
3. Assume the same facts as in b. except you own your own home on which you paid $15,000 in interest and $5,000 in real estate taxes during the year. What is your refund? Answer:____________________
4. Using the same facts as in c. assume that you and your spouse both contributed $2,000 to a traditional IRA. Compute your refund. Answer:____________

Answer 1

2017 Federal Tax rates are as below:

Single
Taxable Income	Tax Rate
$0 – $9,325	10%
$9,326 – $37,950	$932.50 plus 15% of the amount over $9,325
$37,951 – $91,900	$5,226.25 plus 25% of the amount over $37,950
$91,901 – $191,650	$18,713.75 plus 28% of the amount over $91,900
$191,651 – $416,700	$46,643.75 plus 33% of the amount over $191,650
$416,701 – $418,400	$120,910.25 plus 35% of the amount over $416,700
$418,401 or more	$121,505.25 plus 39.6% of the amount over $418,400

As per question wages is $65,000, so it would fall in the 3rd slab marked in bold above.

Tax will be $5,226.25 plus 25% of the amount over $37,950.

= 5,226.25 + (65000-37951)*0.25 = 5,226.25+ 6762.25= $11,988.50.

Withheld for Federal Taxes = $15,000

Refund = $15,000 - $11,988.50= $3011.5

Rate of State tax and refund would depend upon the State, which is not mentioned here.

Married Filing Jointly
Taxable Income	Tax Rate
$0 – $18,650	10%
$18,651 – $75,900	$1,865 plus 15% of the amount over $18,650
$75,901 – $153,100	$10,452.50 plus 25% of the amount over $75,900
$153,101 – $233,350	$29,752.50 plus 28% of the amount over $153,100
$233,351 – $416,700	$52,222.50 plus 33% of the amount over $233,350
$416,701 – $470,700	$112,728 plus 35% of the amount over $416,700
$470,701 or more	$131,628 plus 39.6% of the amount over $470,700

As per question wages is $65,000, it would fall in 2nd slab in bold. Tax is calculated as below:

=1865+ (65000-18651)*15%= 1865+ 6952.35= 8817.35

Tax Withheld = 15000, so refund would be 15,000- 8817.35= $6182.65