Question

Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000, qualified business income of $10,000 from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $200,000 and they sold it for $250,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $16,500 of itemized deductions, and they had $3,550 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice is 18 years of age, the Jacksons may claim a child tax credit for other qualifying dependents for Candice. (Use the

2018 Tax Rate Schedules Individuals Schedule X-Single Schedule Z-Head of Household If tasable income is over: But not over: The tax is: If tasable income is over: But not over: S 13,600 51,800 $ 82,500 $157,500 The tax is: S 9.525 38,700 82,500 157,500 9.525 38,700 82,500 $157,500 $200,000 $500,000 10% of taxable income $952.50 plus 12% of the excess over $9,525 $4,453.50 plus 22% of the excess over $38,700 $14,089.50 plus 24% of the excess over $32,500 $32,089.50 plus 32% of the excess over $157,500 $45,689.50 plus 35% of the excess over $200,000 $150,689.50 plus 37% of the excess over $500,000 13.600 51.800 $ 82,500 $151.500 $200,000 10% of taxable income $1,360 plus 12% of the excess over $13,600 $5.944 plus 22% of the excess over $51,800 $12,698 plus 24% of the excess over $82,500 $30,698 plus 32% of the excess over $157,500 $44,298 plus 35% of the excess over $200,000 $149,298 plus 37% of the excess over $500,000 $500,000 Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) Schedule Y-2-Married Filing Separately If taxable income is over: The tax is: The tax is: But not over: 19,050 77,400 $165,000 $315,000 $400,000 $600,000 If taxable income is over: But not over: S 19,050 77400 $165,000 $315,000 10% of taxable income $1,905 plus 12% of the excess over $19,050 $8,907 plus 22% of the excess over S77.400 $28,179 plus 24% of the excess over $165,000 S64-179 plus 32% of the excess over $315,000 $91,379 plus 35% of the excess over $400,000 $161,379 plus 37% of the excess over $600,000 S 9,525 38,700 82,500 $157.500 $200,000 300,000 9,525 S 38,700 82,500 $157,500 10% of taxable income $952.50 plus 12% of the excess over $9,525 $4,453.50 plus 22% of the excess over $38,700 $14,089.50 plus 24% of the excess over $82,500 $32,089.50 plus 32% of the excess over $157,500 $45,689.50 plus 35% of the excess over $200,000 $80,689.50 plus 37% of the excess over $300,000 $300,000

Description Amount (1) Gross income $110,000 (2) For AGI deductions (3) Adjusted gross income $110,000 (4) Standard deduction (5) Itemized deductions 16,500 (6) Greater of standard deductions or itemized deductions (7) Deduction for qualified business income (8) Total deductions from AGI (9) Taxable income (10) Income tax liability (11) Other taxes (12) Total tax (13) Credits (14) Prepayments Taxes payable

Answer 1