Question

1. Bob and Ella are a married couple with no children and file jointly. they had a gross income of $67,400 and $1,800 in adjustments and $8,950 in itemized deductions. Calculate their tax liability, marginal tax rate, and average tax rate. I filled in as much as i could.
for standard deductions, i have choices of

	single	married	head of household
2017	$6,350	$12,700	$9,350
2018	$12,000	$24,000	$18,000

but I do not know which standard deduction to choose? any help is very appreciated please! also, how do you know when to use itemized deductions vs standard deduction?

gross income:	$67,400
adjustments:	(1,800)
adjusted gross income	$65,600
standard/itemized deduction:	(???)
taxable income:	(65,600- standard deduction)
Tax liability:	(19050+.12(taxable income-19050)
Average/Marginal tax rates:	taxable income+ long term capital gains and dividend taxes-tax credits they qualify for

Answer 1

Answer:

Calculations are done as below for Tax year 2018:

Since Bob and Ella are a married couple and file jointly, hence standard deduction = $24,000

There are no personal exemption amount for 2018.

Since standard deduction ($24,000) is higher than itemized deduction ($8,950) hence standard deduction is taken.