Question

Jeremy earned $101,600 in salary and $7,600 in interest income during the year. Jeremy’s employer withheld $11,200 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 $30,200 in itemized deductions. (Use the tax rate schedules.) 2018.

1.. Determine Jeremy’s tax refund or taxes due.

	Description		Amount
(1)	Gross income
(2)	For AGI deductions
(3)	Adjusted gross income
(4)	Standard deduction
(5)	Itemized deductions
(6)	Greater of standard deduction or itemized deductions
(7)	Taxable income
(8)	Income tax liability
(9)	Child tax credit
(10)	Tax withholding
Taxes due

2.

b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $11,550. What is Jeremy’s tax refund or tax due including the tax on the capital gain?

Description		Amount
(1)	Gross income
(2)	For AGI deductions
(3)	Adjusted gross income
(4)	Standard deduction
(5)	Itemized deductions
(6)	Greater of standard deduction or itemized deductions
(7)	Taxable income
(8)	Income tax liability
(9)	Child tax credit
(10)	Tax withholding

c. Assume the original facts except that Jeremy had only $7,000 in itemized deductions. What is Jeremy’s tax refund or tax due?

	Description		Amount
(1)	Gross income
(2)	For AGI deductions
(3)	Adjusted gross income		$0
(4)	Standard deduction
(5)	Itemized deductions
(6)
(7)	Taxable income		$0
(8)	Income tax liability
(9)	Child tax credit
(10)	Tax withholding

Answer 1

a)

Gross income (101600+7600)	109200
For AGI deductions	0
Adjusted gross income	109200
Standard deduction	18000
Itemized deductions	30200
Greater of standard deduction or itemized deductions	30200
Taxable income	79000
Income tax liability [($51800*22%)+($79000-51800)*24%]	17924
Child tax credit ($2000 per qualifying child)	2000
Tax withholding	11200
Taxes due	4724

b)

Gross income (101600+7600+11550)	120750
For AGI deductions	0
Adjusted gross income	120750
Standard deduction	18000
Itemized deductions	30200
Greater of standard deduction or itemized deductions	30200
Taxable income	90550
Income tax liability [($51800*22%)+($79000-51800)*24%]+(11550*15%)	19657
Child tax credit ($2000 per qualifying child)	2000
Tax withholding	11200
Taxes due	6457

c)

Gross income (101600+7600)	109200
For AGI deductions	0
Adjusted gross income	109200
Standard deduction	18000
Itemized deductions	7000
Greater of standard deduction or itemized deductions	18000
Taxable income	91200
Income tax liability [($82500*24%)+($157500-$91200)*32%]	41016
Child tax credit ($2000 per qualifying child)	2000
Tax withholding	11200
Taxes due	27816