Abe and Betty are married and file a joint income tax return. Abe is 67 years ol

Question

Abe and Betty are married and file a joint income tax return. Abe is 67 years old and Betty is 58 years old. Abe and Betty have no dependents. Abe and Betty have no tax credits and had $25,000 of federal income tax withheld from their paychecks. Other information needed to prepare Abe and Betty’s 2018 individual income tax return is as follows: Abe’s Salary $ 65,000 Betty’s Salary 85,000 Interest received on savings account 2,000 Interest received on State of Tennessee bond 3,000 Total Itemized Deductions 25,000 Calculate Abe and Betty’s: 1. Total income 2. Adjusted gross income 3. Taxable income 4. Tax 5. Taxes due or refund 6. Marginal tax rate 7. Average tax rate 8. Effective tax rate

Explanation / Answer

Income $                         155,000.00 Less: Exclusions $                           (3,000.00) Total Income $                         152,000.00 Above the line deduction $                                           -   AGI $                         152,000.00 Standard deduction $                           25,300.00 Taxable Income $                         129,700.00 Tax Liability $                           20,413.00 Prepayment $                           25,000.00 Refund $                              4,587.00

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