Question

owing chart shows the tax brockets and standard deductions for fing taxes in 2018 obtained from nups wwwhrblock.com/tax-centerirsitax brackets and rates what-are-the-tax-brockets and m s www.doucnoler.net/taxes/federal income tax cockets douchons and exemptions are no longer personal exemptions for tax year 2018, we are gong to assume a personal exemption of $2.000 (tre . Even though there amount of a child tax credit) for the sake of simplicity 2018 Tax Brackets 8. Kalyn is single and files as single. Her gross income is Rate Snac Married Fing Married Head of Seperately Fire Jonthlon 71,696, she claims the standard deduction has one cha 100% 91525 1525 2056 $18.00 X 8,00 3 ,700 11800 1800 and deposits $5,000 into a tax-deferred retirement 22% 900 2.500 SUMO SIO account. 294% 9151500 51500 51900 32% $200,000 $200.000 35% 9500000 $300.000 TIDO 500.000 ( How much wil Kalyn need to subtract from her gross Standard $12.000 $12.000 $24000 $18.000 Debeten income to get her taxable income? Personal $2,000 $2,000 $2.000 $2.000 (A) $12,000 - $2,000 Exemption (B) $12,000 + 2($2,000) (C) $12,000 - 2($2,000) 05,000 (D) $12.000 + $5,000 (E) $2,000 $, 2000 + $5,000 (b) What is Kalyn's taxable income? (c) How much does Kalyn owe in federal income taxes?!

Answer 1

Given that Kalyn is Single, the tax bracket of Single would be applicable.

Gross Income = $47,656

Standard deduction = $12000

Personal Exemption = $2000

It shall be noted that Tax-deferred accounts allow one to realize immediate tax deductions up to the full amount of your contribution. So, immediate tax deduction = $5000

(a) Thus, for taxable income, Kalyn need to subtract $12000 + $ 20000 + $5000 from gross income to arrive at taxable income.

Thus, the correct answer is: (E)

(b) Kalyn's taxable income = $47656 - $12000 - $2000 -$5000 = $28,656

(c) Taxes paid = 10%*$9525 + 12%*($28656 - $9525)

Taxes paid = $952.50 + $2295.72 = $3248.22

Thus, federal income tax paid is $3248.22