The Johnsons Calculate Their Income Taxes
Several years have gone by since Harry and Belinda graduated from college and started their working careers. They both earn good salaries. They believe that they are paying too much in federal income taxes. The Johnsons' total income last year included Harry's salary of $66,000 and Belinda's salary of $88,000. She contributed $3,050 to her 401(k) for retirement. They earned $400 in interest on savings and checking and $3,050 interest income from the trust that is taxed in the same way as interest income from checking and savings accounts. Harry contributed $3,050 into a traditional IRA.
What is the Johnsons' reportable gross income on their joint tax return?
$ _____________
What is their adjusted gross income?
$ ___________
What is the total value of their exemptions?
$ _________
How much is the standard deduction for the Johnsons?
$ ___________
The Johnsons are buying a home that has monthly mortgage payments of $3,000, or $36,000 a year. Of this amount, about $32,800 goes for interest and real estate property taxes. The couple has an additional $14,000 in other itemized deductions. Using these numbers and Table 4-2, calculate their taxable income and tax liability. Round your answer for tax liability to the nearest cent.
Taxable income | $ |
Tax Liability | $ |
Assuming they had a combined $16,000 in federal income taxes withheld, how much of a refund will the Johnsons receive? Round your answer to the nearest cent.
$ _____________
What is their marginal tax rate? Round your answer to the nearest whole number.
%____________________
Answers :
1. $157,450 ( $$66,000 + $88,000 + $400 + $3,050)
($66,000 - Harry's salary, $88,000 - Belinda's salary, $400 - interest and $3,050 - interest)
2. $151,350 ( $157,450 - $3,050 - $3,050 = $151,350)
3. $6,100 ($3,050 + $3,050)
4. $6,100 ( $3,050 + $3,050)
5. $151,350 is the taxable income
Tax liability will be 20% = $151,350 × 20% = $30,270
The Johnsons Calculate Their Income Taxes Several years have gone by since Harry and Belinda graduated...
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