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Please do this in 2018 tax rate and show how you got the tax rate. Show all calculations for tax rate.
PROBLEMS 1:2-29 Computation of Tax. The following information relates to two married couples: Millers $95,000 1,000 5,500 900 20,000 1,750 8,500 Smiths Salary (earned by one spouse) Taxable interest income Deductible IRA contribution Itemized deductions Withholding $30,000 20 0 Compute the 2018 tax due or refund due for each couple. Assume that any restrictions on itemized deductions have been applied. Ignore credits.
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Solution: As per IRS, Married filing separtely can avail either Standand or itemized deduction If one has used itemized deduction, then it is forced to use itemized deduction by other: If one will use standard dedution, then other will have to use standard deduction In 2018, Standard dedution of Single is $12,000 for both $24000. Which will be the better option instead using itemized deduction. Answers are highlighted in yellow: Particulars Salary Taxable Interest Income Gross Income Deduction for AGI: Deductible IRA contribution AGI (Adjusted gross income) Greater of Standard or itemized deduction: Taxable Income Tax - per 2018 tax rate schedule (Married filing separately): [952.50 + (18020-9525)*12%], [4453.50 + (78500-38700)*22%) Less: Withholdings Tax Due Millers 30,000 $ 95,000 20 $1,000 $ 30,020 $ 96,000 Smiths - $-5,500 $ 30,020 $ 90,500 $ -12,000 $ -12,000 $ 78,500 $ 18,020 $1,971.90 $13,209.50 1,750.00 $-8,500.00 221.90 4,709.50 or $222or $4710 $- If rounded to nearest dollar:

For your reference, If itemized deduction will availed: AGI (Adjusted gross income) Itemized Deduction Taxable Income Tax - per 2018 tax rate schedule (Married filing separately): [952.50 + (29120-9525)*12%], [4453.50 + (70500-38700)*22%) Less: Withholdings Tax Due $ 30,020 $ 90,500 $-900 $ -20,000 $ 29,120 $ 70,500 3,303.90 $11,449.50 $-1,750.00 $ -8,500.00 $ 1,553.90 2,949.50 or $1554or $2950 If rounded to nearest dollar:

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