Question

blems Heli Requirea information (The following information applies to the questions displayed below.) Jeremy earned $101,300 in salary and $7,300 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 $28,700 in itemized deductions. (Use the tax rate schedules.) b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $10,050. What is Jeremy's tax refund or tax due Including the tax on the capital gain? (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Description Amount (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) Child tax credit (10) Tax withholding < Prev 10 11 of 11 Next >

Answer 1

following points need to be kept in mind:-

1. Head of the Household is allowed for a standard deduction of $ 18000 however here itemized deductions are more than that of standard deduction therefore we will take itemized deduction and either we can take standard deduction or itemized deduction at a time.

2. Head of the household is tax free on Capital gains up-to $ 52750.

3. Tax is calculated as per following rates:-

Taxable Income	Rate
$0 - $13,600	10.0%
$13,600 - $51,800	12.0%
$51,800 - $82,500	22.0%
$82,500 - $157,500	24.0%
$157,500 - $200,000	32.0%
$200,000 - $500,000	35.0%
$500,000+	37.0%

4. Child tax credit would be $ 2000.

Calculation of Tax Due or Refund :-

Gross Income	$1,08,600.00
For AGI Deductions	$0.00
Adjusted gross income	$1,08,600.00
Standard Deduction	$0.00
Itemized deductions	$28,700.00
Taxable Income	$79,900.00
income tax liability	$12,126.00
Child tax credit	$2,000.00
tax withholding	$11,000.00
Tax Due / (Refund)	-$874.00