Jason is single and has no dependents. His salary and wages for 2019 total $62,000, of...
Jason is single and has no dependents. His salary and wages for 2019 total $62,000, of which Jason had $8,250 in federal tax withheld from his pay check. Jason made retirement plan contributions of $3,500 and had the following deductions: Bank One Mortgage Interest: $3,100 Property Taxes: $2,000 Charitable Contributions: $1,000 Calculate Taxable Income and the corresponding Income tax due considering only the above information. US TAX Rate
Homework Answers
Calculation of Taxable Income Due - Total income is different from taxable income. First, deductions like health care, contribution to 401(k), contribution to internal company funds are deducted from gross income to calculate adjusted gross income. From the adjusted gross income, standard or itemized deductions whichever is higher is deducted to calculate taxable income.
Gross Income = $62,000
Adjusted gross income = Gross Income - Retirement plan contributions = $62,000 - $3,500 = $58,500
Standard deduction for 2019 = $12,200
Itemized Deduction = $3,100 + $2,000 + $1,000 = $6,100
Hence, standard deduction will be deducted from AGI
Taxable Income = Adjusted gross income - Standard Deduction = $58,500 - $12,200 = $46,200
Tax on first $9,700 @10% = $970
Tax from $9,701 to $39,475 @12% = $3,573
Tax from $39,476 to $46,200 @22% = $1,479.5
Total Income Taxes = $970 + $3,573 + $1,479.5 = $6,022.5
Amount federal tax withheld = $8,250
Income Tax refund = $8,250 - $6,022.5 = $2,227.5
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