Question

Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy's employer withheld $11,000 of federal income taxes from Jeremy's paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $23,000 in itemized deductions. (Use the tax rate schedules.) a. Determine Jeremy's tax refund or taxes due (assume Jeremy did not receive the recovery rebate in advance of filing his tax return). Description Amount $ 0 (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) (7) Taxable income (8) Income tax liability (9) Credits (10) Tax withholding $ 0

Answer 1

Solution

a) Jeremy's tax refund is $302 as computed below :

Description	Amount	Computation
1. Gross income	106,000	100,000 salary + 6000 interest income
2. For AGI deduction	0
3. Adjusted gross income	106,000	1 - 2
4. Standard deduction	18350	Head of household
5. Itemizes deduction	23000
6. Greater of standard deduction or itemized   deduction	(23000)	5 > 4
7. Taxable income	83000
8. Income tax liability	12,698	(83000 - 52850) * 22% +6065 (See tax rate schedule for head of household)
9. Child tax credit	(2000)
10. Tax withholding	(11000)
Tax refund	($302)	8 + 9 + 10

b. Jeremy has a tax due of $298 below :

Description	Amount	Computation
1. Gross income	110,000	$100,000salary +$6000 interest income +$4000 long term capital gain
2. For AGI deductions	0
3. Adjusted gross income	$110,000	1 - 2
4. Standard deduction	18350	Head of household
5. Itemized deductions	23000
6. Greater of standard deduction or itemized deductions	(23000)	5 > 4
7. Taxable income	87000
8. Income tax liability	13298	[(83000 - 52850) * 22% + $6065] +4000*15% (See tax rate schedule for head of household)
9. Child tax credit	(2000)
10. Tax withholding	(11000)
Taxes due	$298	8 + 9 + 10

c. Jeremy has a tax due of $790 below :

Description	Amount	Computation
1. Gross income	106000	$100000 Salary + $6000 Interest income
2. For AGI deductions	0
3. Adjusted gross income	106000	1 - 2
4. Standard deduction	18350	Head of household
5. Itemized deductions	7000
6. Greater of standard deduction or itemized deductions	(18350)
7. Taxable income	87650
8. Income tax liability	13790	(87650 - 84200) * 24% + 12962(See tax rate schedule for head of household)
9. Child tax credit	(2000)
10. Tax withholding	(11000)
Tax due or (tax refund)	$790	8 + 9 +10