Question

Use Tax Rate Schedule Carson Wentz, of Philadelphia, determined the following tax information: salary, $163,000; interest earned, $2,000; qualified retirement plan contribution, $4,000; personal exemption, $4,050; itemized deductions, $11,000. Filing single, calculate Carson's taxable income and tax liability. (Hint: Use Table 4-2.) Round your answer for tax liability to the nearest cent.

Table 4-2 Tax Rate Schedules DO IT IN CLASS Single Individuals If taxable income is over- 0 But not over- $ 9,275 $ 37,650 $ 91,150 $190,150 $413,350 $415,050 No limit The tax is 10% of the taxable income $927.50 plus 15% of the amount over $9,275 $5,183.75 plus 25% of the amount over $37,650 $18,558.75 plus 28% of the amount over $91,150 $46,278.75 plus 33% of the amount over $190,150 $119,934.75 plus 35% of the amount over $413,350 $120,529.75 plus 39.6% of the amount over $415,050 $ 9,276 $ 37,651 $ 91,151 $190,151 $413,351 Over $415,050 Married couples Filing Jointly If taxable income is over- $ 0 $ 18,551 $ 75,301 $151,901 $231,451 $413,351 Over $466,950 But not over- $ 18,550 $ 75,300 $151,900 $231,450 $413,350 $466,950 No limit The tax is- 10% of the taxable income $1855 plus 15% of the amount over $18,550 $10,367.50 plus 25% of the amount over $75,300 $29,517.50 plus 28% of the amount over $151,900 $51,791.50 plus 33% of the amount over $231,450 $111,818,50 plus 35% of the amount over $413,350 $130,578.50 plus 39.6% of the amount over $466,950

Answer 1

Amount $ 165,000 (2) Answer la) Description Gross income For AGI Deductions Qualified retirement plan contribution (3) Adjusted Gross Income Personal exemption itemized deduction Taxable income Income Tax Liability (9) Child Tax Credit (10) Tax Withholding (Refund]/Due (5) (6) 4,000 161,000 4,050 11,000 145,950 33,903 33,903 Calculation of Tax Taxable income 145,950 Falls within the bracket of ($91,150 - $190,150) which is taxable as 18558.75 plus 28% of excess over 91150 Excess (145950- 91150) 54,800 Tax Rate 28% Tax (A) 15,344 Tax (B) 18,559 Total Tax 33.903