Question

Harry and Ginny Potter have been married for 24 years and have three children who qualify as their dependents (Albus, 4; James, 16; and Lily, 19). The couple received salary income of $265,000 and they sold their home this year. They initially purchased the home 8 years ago for $220,000 and have lived in it ever since. They sold it for $690,000. They sold some stock they had owned for 4 years and had a $8,000 gain on the sale. The Potter’s also cashed in a Certificate of Deposit early during the year and paid a $1,250 penalty on the early withdrawal. Additionally, Harry (who teaches middle school) spent $575 on supplies and snacks for his classroom. The Potter accumulated $30,920 of itemized deductions and they had $21,550 withheld from their paychecks for federal taxes. Gross IncomeDeductions FOR AGIAdjusted Gross IncomeStandard DeductionItemized DeductionsTaxable IncomeTax LiabilityAmount Due OR RefundUse the table below to show what you did and did not include in Gross Income, Deductions and/or other items and your explanation. Feel free to add additional rows as necessary.ItemAmountExplanation

Please input the following information:

Gross Income:

Deductions FOR AGI:

Adjusted Gross Income:

Standard Deduction:

Itemized Deductions:

Taxable Income:

Tax Liability:

Amount Due OR Refund:

Answer 1

Calculation of Taxable Income
Particulars	Amount	Amount
Salary Income		265000
Income from HP
Sale consideration	690000
(-) Purchase price	220000
Amount	470000
Income from HP		470000
Income from Capital Gain		8000
Gross Total Income		743000
Deductions
Penalty on early withdrawl	1250
Snacks Expenses	575
Adjusted Total Income		741175
(-)Standard deduction on HP	141000
Itemized Deduction	30920
Taxable Income		569255
Calculation of Tax Liability
First 2,50,000	NIL
Next 2,50,000	5%	12500
Next 69255	20%	13851
TotalTax Liability		26351
Already paychecks for federal tax		21550
Amount due to pay tax		4801