Problem 1-2 (Algorithmic) The Tax Formula for Individuals (LO 1.3) Jason and Mar

Question

Problem 1-2 (Algorithmic)
The Tax Formula for Individuals (LO 1.3)

Jason and Mary are married taxpayers in 2017. They are both under age 65 and in good health. For 2017 they have a total of $104,400 in wages and $505 in interest income. Jason and Mary's deductions for adjusted gross income amount to $4,835 and their itemized deductions equal $11,000. They claim two exemptions for the year on their joint tax return.

Table for the standard deduction

a. What is the amount of Jason and Mary's adjusted gross income?
$

b. In order to minimize taxable income, Jason and Mary will in the amount of $.

Filing Status 2017 Standard Deduction Single $ 6,350 Married, filing jointly 12,700 Married, filing separately 6,350 Head of household 9,350 Qualifying widow(er) 12,700

Explanation / Answer

Part A

Gross income ( $104,400 wages + $505 interest income).......................................................... 104905

Less: for AGI deductions............................... 4835

Adjusted gross income................................. 109740

Part B

Adjusted gross income.............................................. 109740

Less: greater of itemized deduction 11000 and standard deduction 12700....................... .....................................12700

Less : personal exemptions (4050*2).............................9100

Taxable income................................................................ 87940

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