Marcus is a 51 year old widower whose wife died in 2017. During 2018, his 16...
| Marcus is a 51 year old widower whose wife died in 2017. During 2018, his 16 year old dependent | ||||||||
| son lived with him for the entire tax year. Marcus's 2018 income consists of salary of $91,000 and | ||||||||
| interest income of $19,400. He lives in a state that does not have a state income tax. During the year | ||||||||
| He paid home mortgage interest expense of $21,000 and real estate taxes of $6,200. He also | ||||||||
| contributed $10,000 in cash to various charities in his community. These are his only itemized | ||||||||
| deductions during 2018. | ||||||||
| A)What filing status applies to Marcus for 2018? |
| B)Compute Marcus's 2018 taxable income and gross tax. |
| C)What would Marcus's 2018 filing status be if his wife has been dead for three years? |
| D)Assume that Marcus's son is age 24. He is married and does not qualify as a dependent. | |||||||
| The son and his wife do not live with Marcus. What is Marcus's 2017 filing status in this situation? |
| E)Compute Marcus's 2018 taxable income and tax considering the information in part d. |
Homework Answers
A. Married Filing Jointly tax filing status
B.
Taxable income
| Particulars | Amount($) |
Amount ($) |
| Income from salary | 91000 | |
| Interest Income | 19400 | |
| Total Income (a) | 110400 | |
| Less: Deductions | ||
| Mortgage Interest expense | 21000 | |
| Real Estate taxes | 6200 | |
| Total Deductions (b) | 27200 | |
| Gross Income (a-b) | 83200 | |
| Less: Standard Deduction | 25050 | |
| Net Taxable Income | 58150 |
Tax expense:
| $19,051 – $77,400 | $1,905 plus 12% of the amount over $19,050 |
Therefore $1905 + 12% of (58150-19050)=$6597
C. Qualifying Widower tax filing status
D. Same as part A.
E.
| Particulars | Amount($) |
Amount ($) |
| Income from salary | 91000 | |
| Interest Income | 19400 | |
| Total Income (a) | 110400 | |
| Less: Deductions | ||
| Mortgage Interest expense | 21000 | |
| Real Estate taxes | 6200 | |
| Total Deductions (b) | 27200 | |
| Gross Income (a-b) | 83200 | |
| Less: Standard Deduction | 24000 | |
| Net Taxable Income | 59200 |
$1905 + 12% of (59200-19050)=$6723
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