Question

FINANCIAL PLANNING PROBLEMS 1. Computing Taxable Income. Thomas Franklin arrived at the following tax information Gross salary, $41.780 Interest earnings, $225 Dividend income, $80 One personal exemption, $2,650 Itemized deductions, $3,890 Adjustments to income, $1,150 What amount would Thomas report as taxable income? (Obj.1) 2. Determining Tax Deductions. If Lola Harper had the fol lowing itemized deductions, should she use Schedule A or the standard deduction? The standard deduction for her tax situation is $6,050. (Obj. 2) Donations to church and other charities, $1,980 Medical and dental expenses exceeding 7.5 percent of ad- justed gross income, $430 State income tax, $690 Job-related expenses exceeding 2 percent of adjusted gross income, $1,610 3. Calculating Average Tax Rate. What would be the average tax rate for a person who paid taxes of $4,864. 14 on a tax- able income of $39,870? (Obj. 2) 4. Determining a Refund or Taxes Owed. Based on the follow- ing data, would Ann and Carl Wilton receive a refund or owe additional taxes? (Obj. 2) Adjusted gross income, $43,190 Itemized deductions, $11,420 Child care tax credit, $80 Federal income tax withheld, $6,784 Amount for personal exemptions, $7,950 Tax rate on taxable income, 15 percent nn chould

Answer 1

Answer 1=

Gross Salary = $41780

Interest Earnings= $ 225

Dividend Income= $ 80 ( Exempt from Tax)

One Personal Exemption= $2650

ItemtiZed Deduction=$3890

Adjustment to income= $1150

Calculation of Gross Total Income

Gross Salary = $41780$36615

Add: Interest Earnings= $ 225

Add: Adjustment to income= $1150

Total Income = $43155

less deductions=

One Personal Exemption= $2650

ItemtiZed Deduction=$3890 $6540

gross total income $36615

Answer(2)

The Standard Deductions of her tax Situation= $6050

Donation to church and charities= Fully Exempt($1980)

Medical and dental expenses exceeding 7.5%of adjusted gross income= Taxable

State Income Tax= $690

Job Related expenses Exceeding 2%= Taxable

Answer-(3)

Average Tax Rate= (Taxes Paid/ Taxable Income)*100

( $4864.14/$39870)*100

=12.2%

Answer-4:

Adjusted gross Income.$ 43,190

Itemised Deductions. $11,420

Child Care Tax Credit. $80

Federal Income Tax withheld $6,784

Amount For personal exemptions .$ 7,950

tax rate on taxable Income, 15 percent

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