(a) -- Determine 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 | 107800 |
(2) | For AGI deductions | - | 0 |
(3) | Adjusted gross income | Same as gross income | 107800 |
(4) | Standard deduction | Standard deduction for head of household | 18350 |
(5) | Itemized deductions | Given in question | 26700 |
(6) | Greater of standard deduction or itemized deductions | Greater of: (4) or (5) | 26700 |
(7) | Taxable income | Adjusted gross income - Itemized deductions | 81100 |
(8) | Income tax liability | Refer working note - (1) | 12280 |
(9) | Child tax credit | $2000 per child | 2000 |
(10) | Tax withholding | Given in question | 11000 |
Tax Due | $12280 - $2000 - $11000 | 720 | |
# Working note - (1) - Computation of Jeremy's Tax Liability for Tax Year 2019 -
Tax Rate | Taxable Income ($) | Calculation | Amount ($) | |
I. | 10% | 0 - 13850 | $13850 * 10% | 1385 |
II. | 12% | 13851 - 52850 | ($52850 - $13850) * 12% | 4680 |
III. | 22% | 52851 - 84200 | ($81100 - $52850) * 22% | 6215 |
Jeremy's Tax Liability | I + II + III | 12280 | ||
.
(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 | 107800 |
(2) | For AGI deductions | - | 0 |
(3) | Adjusted gross income | Same as gross income | 107800 |
(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) | 7000 |
(7) | Taxable income | Adjusted gross income - Itemized deductions | 89450 |
(8) | Income tax liability | Refer working note - (2) | 14222 |
(9) | Child tax credit | $2000 per child | 2000 |
(10) | Tax withholding | Given in question | 11000 |
Tax Due | $14222 - $2000 - $11000 | 1222 | |
# Working note - (2) - Computation of Jeremy's Tax Liability for Tax Year 2019 -
Tax Rate | Taxable Income ($) | 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 | ($89450 - $84200) * 24% | 1260 |
Jeremy's Tax Liability | I + II + III + IV | 14222 | ||
Required information [The following information applies to the questions displayed below.] Jeremy earned $100,900 in salary...
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