Question

What is the taxable income liability?

Jeremy earned $101,900 in salary and $7,900 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 $31,700 in itemized deductions, (Use the tax rate schedules.) Problem 4-28 Part-b b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $13,050. What is Jeremy's tax refund or tax due including the tax on the capital gain? Answer is not complete Description Amount (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) eized deductions (6) Greater of standard deduction or itemized deductions (7) Taxable income (8) Income tax liability (9) Child tax credit (10) Tax withholding S 122,850 S 122,850 18,000 31,700 31,700 $ 91,150 S 16,731 2,000 11,200

Answer 1

Tax Rate Schedule :

Tax Rates for Net Capital Gains and Qualified Dividends Long-Term Copital Gains Rate Mambd Filing Separate up to Single Taxpayers Jointly Married Filing Head of Household up to %|Up to 10$425 800 $479,000 $452 400 $239 500 20 0 $425 800 $479,000 $452 400 $239,500 Up to $38,600 $77,200 $51,700 $38,600 |$38,600- |$77.200-1$51,700-1$38,600- Over Over Over Over

Salary Income           :$101900

Interest                    : $7900

Capital Gain      : $13050

Gross Total Income :$122850

Less : Deduction                           : $31700

Net Total Income                            : $91,150

Net Taxable Income                   :$78,100($91150-$13050)Because Tax on Capital Gain is charged under Different         Rate, so while Calculating Tax It will be deducted

Tax as per Slab Rates                :$5944+22%($78100-$51800)

                                                      :$5944+22%($26300)

                                                       :$5944+$5786

                                                        :$ 11730

Less :Tax Withhold With Income Tax :- $11200

           Child Tax Credit                          :-$2000

             Total Tax Deductions                 :-$ 13200

   Net Tax Paid/(Refund)                          :$11730-$13200

                                                             =($1470)

    Net Amount Refund    : $1,470

Assumptions :

1) Salary Earnings are taken as Gross Total Salary

2) Maximum deductions as per whichever is Higher Regarding above deductions

3) Tax on Capital Gain is not taken as per above table because the assessee is on the capital Gain Below $38,600.