Question

Required information [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.) c. Assume the original facts except that Jeremy has 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 (4) Standard deduction (5) Itemized deductions (7) Taxable income (8) Income tax lability (9) Child tax credit (10) Tax withholding

Answer 1

(c) -- Assume the original facts except that Jeremy had only $7000 in itemized deductions. What is Jeremy’s tax refund or tax due?

Answer -

Computation of Jeremy's (Tax Refund) / Tax Due for Tax Year 2019

	Description	Explanation	Amount ($)
(1)	Gross income	Salary + Interest income	106000
(2)	For AGI deductions	-	0
(3)	Adjusted gross income	Same as gross income	106000
(4)	Standard deduction	Standard deduction for head of household	18350
(5)	Itemized deductions	Given in question	7000
(6)	Greater of standard deduction or itemized deductions	Greater of: (4) or (5)	18350
(7)	Taxable income	Adjusted gross income - Standard deduction	87650
(8)	Income tax liability	Refer working note - (1)	13790
(9)	Child tax credit	$2000 per child	2000
(10)	Tax withholding	Given in question	11000
Tax Due		$13790 - $2000 - $11000	790

# Working note - (1) - Computation of Jeremy's Tax Liability for Tax Year 2019 -

	Tax Rate	Taxable Income ($)	Calculation	Amount ($)
I.	10%	0 - 13850	$13850 * 10%	1385
II.	12%	13851 - 52850	($52850 - $13850) * 12%	4680
III.	22%	52851 - 84200	($84200 - $52850) * 22%	6897
IV.	24%	84201 - 160700	($87650 - $84200) * 24%	828
Jeremy's Tax Liability			I + II + III + IV	13790