Question

Tax Return Calculation #1 BUS 121 - Name Last 4 of CUNYFirst ID Jamal and Hope have gathered all the information to file their income tax return for the year. They calculate income to be $95,000. Adjustments to income include Hope's $6,000 deductible contribution to Hope's $6,000 deductible contribution to her retirement account and Jamal's $9,000 business expenses. Their item A U UU business expenses. Their itemized deductions total $22.000. Hope had her employer withhold $4,000 Tederal income tax from her paychecks over the vear Jamal paid estimated taxes for his business quarterly, when totaled $2,700 for the year. Using the 2019 tax tables (not the outdated tables and rates from the textbook), answer the following questions a) Do Hope and Jamal owe taxes, or will they receive a tax refund from the Federal Government? How much? b) What is their marginal income tax bracket? c) What is their average tax rate?

Answer 1

(a) Calculation of Taxable income & tax/ refund thereon:-

Gross Income 95000

Less:- Adjustment to income:-

(a) Contribution to retirement account 6000

(b) Business expenditure 9000 15000

Adjusted Gross Income 80000

Less:- Higher of

(a) Itemized Deduction 22000

(b) Standard Deduction (Married & filing jointly) 24400

Higher of (a) or (b) 24400

Taxable Income 55600

Tax Theron:-

On First 19400 @10% 1940

On Balance (55600-19400)= 36200 @ 12% 4344

Total Tax Liability 6284

Less:- Withheld Tax 4000

Less:- Estimated Taxes paid 2700

Refund 416

(b) Marginal Income Tax bracket :-

Marginal Income Tax Bracket is 22%

(c) Average Tax Rate:-

Is equal to Total taxes divided by Total Taxable Income:-

(6284/55600) / 100= 11.30%