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 $5,500 in federal income taxes withheld from their paychecks during the course of the year. (Use the tax rate schedules.)

what is the total amount of marc and michelle's deductions from agi?

what is marc and michelle's taxable income?

what is marc and michelle's taxes payable or refund due for the year?

Answer 1

1. what is the total amount of marc and michelle's deductions from agi?

                      $22350

2. what is marc and michelle's taxable income?

                                     $52,650

3. what is marc and michelle's taxes payable or refund due for the year?

     Tax refund is $437

Description	Amount	Computation
(1) Realized income from all sources	$76,850	64,000 salary + 12,000 salary + 350 municipal bond interest + 500 corporate bond interest
(2) Excluded or deferred income	350	Nontaxable municipal bond interest
(3) Gross income	76,500	(1) – (2)

(4) For AGI deductions	1500	1,500 alimony paid
(5) Adjusted gross income	75000	(3) – (4)
(6) Standard deduction	11,400	Married filing jointly
(7) Itemized deductions	6,000
(8) Greater of standard deductions or itemized deductions	11,400	(6) > (7)
(9) Personal and dependency exemptions	10,950	3,650 x 3 (two personal exemptions and one dependency exemption)
(10) Total deductions from AGI	(22,350)	(8) + (9)
(11) Taxable income	$52,650	(5) + (10)
(12) Income tax liability	$7063	(52650 – 16,700) x 15% + 1,670 (see tax rate schedule for married filing jointly) Amount rounded to whole dollar.
(13) Other taxes	0
(14) Total tax	$7063	(12) + (13)
(15) Credits	(2,000)	Child credit for 10-year old son Matthew
(16) Prepayments	(5,500)

Taxes refund with return

$437

(14) + (15)+ (16)