Question

Joanne and John are married with 3 children. They are filing taxes jointly. They have a gross income of $145,013, and they made the following tax-deductible purchases:

Charitable contributions: $2,895
Medical expenses: $5,459
Student loan interest: $1,611

Compute their final income tax using the information below.

Married Individuals Filing Joint Returns and Surviving Spouses If Taxable income Is Between: The Tax Due is: 0 - $19,400 10% of taxable income $19,401 - $78,950 $1,940 + 12% of the amount over $19,400 $78,951 - $168,400 $9,086 + 22% of the amount over $78,950 $168,401 - $321,450 $28,765 +24% of the amount over $168,400 $65,497 + 32% of the amount over $321,400 $321,451 - $408,200 $408,201 - $612,350 $93,257 + 35% of the amount over $408,200 $612,351 + $164,709.50 + 37% of the amount over $612,350

Round your answer to the nearest dollar.

Standard deduction for married filers: $24400

Answer 1

Calculation for net taxable income

Particulars	$	$
Gross income		145,013
Less: Above the line deduction :
Student Loan interest		1,611
Adjusted gross income (AGI)		143,402
less: standard deduction or itemized deduction ( which ever is higher)
A) Itemized deduction
Medical expenses (actual medical expenses in excess of 7.5% of AGI)	nil
$ 5,459 - { 7.5% of $ 143,402} = ( $ 5,296)
Charitable contribution { $ 2,895 X 50%}	1,447.5
Total itemized deduction	1,447.5
B) Standard deduction	24,400
Standard deduction taken because it is higher than itemized deduction		24,400
Net taxable income		119,002

Calculation for net tax payable

Range of net taxable income	Rate of tax	Tax liability
Up-to $ 19,400	10%	$ 1,940
$ 19,401 to $ 78,950	12%	$ 7,146
$ 78,951 to $ 119,002	22%	$ 8,811.44
PFinal income tax payable =		$ 17,897.44