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Saved Help Save& Exit Submi [The following information applies to the questions displayed below. Check my work Jeremy earned $101,400 in salary and $7,400 in interest income during the year. Jeremy's employer withheld $11,200 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 $29,200 in itemized deductions. (Use the of 3 tax rate schedules.) a. Determine Jeremy's tax refund or taxes due. ook int sk Description (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction Print (6) Greater of standard deduction or itemized deductions (7) Taxable income (8) Income tax iability (9) Child tax credit (10) Tax withholding Prev1 2 3 of 40Next>

Explanation / Answer

Using the 2017 tax rate schedules to determine Jeremy’s taxes due a) Salary $101,400.00 Interest Income $7,400.00 1) Gross income $108,800.00 2) For AGI deductions $0.00 3) Adjusted gross income $108,800.00 (1) – (2) (4) Standard deduction $9,350.00 Head of household (5) Itemized deductions $29,200.00 (6) Greater of standard deduction or itemized deductions $29,200.00 (5) > (4) (X) Personal and dependency exemptions = $4050 x 3 $12,150.00 (personal exemption and two dependency exemptions) (7) Taxable income $67,450.00 (3) - (X)- (7) 8) Income tax liability $11,115.00 (67,450 – 50,800) × 25% + $6,952.50 Head of Household Taxable Income Tax Brackets and Rates, 2017 9) Child credit $2,000.00 $1,000 for each qualifying child under the age of 17 10) Tax Withholding $11,200.00 Tax Refund -$2,085.00 (8) - (9) -(10) Assume that in addition to the original facts, Jeremy has a long-term capital gain of$10,550 b) Salary $101,400.00 Interest Income $7,400.00 Long term Capital gain $10,550.00 1) Gross income $119,350.00 2) For AGI deductions $0.00 3) Adjusted gross income $119,350.00 (1) – (2) (4) Standard deduction $9,350.00 Head of household (5) Itemized deductions $29,200.00 (6) Greater of standard deduction or itemized deductions $29,200.00 (5) > (4) (X) Personal and dependency exemptions = $4050 x 3 $12,150.00 (personal exemption and two dependency exemptions) (7) Taxable income $78,000.00 (3) - (X)- (7) 8) Income tax liability $13,752.50 (78000 – 50,800) × 25% + $6,952.50 Head of Household Taxable Income Tax Brackets and Rates, 2017 9) Child credit $2,000.00 $1,000 for each qualifying child under the age of 17 10) Tax Withholding $11,200.00 Tax Due $552.50 (8) - (9) -(10) Assume the original facts except that Jeremy had only $7,000 in itemized deductions. c) Salary $101,400.00 Interest Income $7,400.00 1) Gross income $108,800.00 2) For AGI deductions $0.00 3) Adjusted gross income $108,800.00 (1) – (2) (4) Standard deduction $9,350.00 Head of household (5) Itemized deductions $7,000.00 (6) Greater of standard deduction or itemized deductions $9,350.00 (5) > (4) (X) Personal and dependency exemptions = $4050 x 3 $12,150.00 (personal exemption and two dependency exemptions) (7) Taxable income $87,300.00 (3) - (X)- (7) 8) Income tax liability $16,077.50 (87,300 – 50,800) × 25% + $6,952.50 Head of Household Taxable Income Tax Brackets and Rates, 2017 9) Child credit $2,000.00 $1,000 for each qualifying child under the age of 17 10) Tax Withholding $11,200.00 Tax due $2,877.50 (8) - (9) -(10)

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