Question

Problem 4-28 (LO 4-1) [The following information applies to the questions displayed below.] Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy’s employer withheld $11,000 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $23,000 in itemized deductions. (Use the tax rate schedules.) Problem 4-28 Part-c c. Assume the original facts except that Jeremy has only $7,000 in itemized deductions. What is Jeremy’s tax refund or tax due?

Answer 1

Description	Amount	Computation
(1)Gross Income	$106,000	$100,000 Salary+ $6000 Interest income
(2)For AGI Deductions	0
(3)Adjusted Gross Income	$106,000	(1) - (2)
(4)Standard Deduction	$18350	Head of Household
(5)Itemized deductions	$7,000
(6)Greater of standard deduction and itemized deductions	($18350)	(5)<(4)
(7)Taxable Income	$87650	(3) + (6)
(8)Income Tax liability	$13,790	($87,650 -$84,200)×24%+$12,962(See tax rate schedule for head of household)
(9)Child Tax credit	($2000)
(10)Tax withholding	($11000)
Income Tax liability	$790	(8) + (9) + (10)