Problem 1-7 The Tax Formula for Individuals, Filing Status and Tax Computation (

Question

Problem 1-7
The Tax Formula for Individuals, Filing Status and Tax Computation (LO 1.3, 1.5, 1.6, 1.7)

Ulysses and Penelope are married and file separate returns for 2017. Penelope itemizes her deductions on her return. Ulysses' adjusted gross income was $17,400, his itemized deductions were $2,250, and he is entitled to one exemption.

Table for the standard deduction

Click here to access the tax tables.

Calculate Ulysses' income tax liability assuming the couple does not live in a community property state.

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

Note: Tax rates for 2017:

10%

15%

Ulysses Adjusted Gross income = $17,400 Less: itemized exemption -2250 AGI after exemption $15,150 Less: Standard Deduction -6350   Taxable Income $8,800 Tax rate 10% Tax liability for 2017 $880

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