Harry and Mary Prodigious are married filing jointly and have 12 children. Six o
ID: 2385709 • Letter: H
Question
Harry and Mary Prodigious are married filing jointly and have 12 children. Six of the children are under the age of 17 in 2011. With the large number of children, they live in austerity . Harry, in his spare time, works a large garden that provides food for the family. Mary makes all the chldrens clothes. Harry works for a local engineering firm and earns a salary of $100,000 in 2011. Mary does not work outside the home. The only other income is taxable interest in the amount of $8,000. They claim the standard deduction in filing their 2011 return and have no tax preference or adjustments for purposes of the AMT.a. Compute Harry and Mary's regular tax and AMT under the facts above.
b. Comment on the tax policy implications of your answer in Part a above
Explanation / Answer
salary
$ 100,000
Interest and dividened
8000
AGI
108000
STANSARD dedeuctiond $ 11,600
Personal exemptions (14 x 3700)= 51000
63 400
Taxable income
44600
Regular income tax
5840
Child tax credit (1000 x 6)
6000
Net regular tax
0
Taxable income
44600
Personal exemption
51800
Standard deductions
11600
AMTI
108 000
MINUS EXEMPTIN
74450
AMT Base
33,550
X 0.26
Pre credit tenetative minimum tax
8723
Child tax credit
6000
Tenatative minimum tax
2723
Net regular tax
0
Alternative minimum tax
2723
Additional charge of $ 2723 in the form AMT
salary
$ 100,000
Interest and dividened
8000
AGI
108000
STANSARD dedeuctiond $ 11,600
Personal exemptions (14 x 3700)= 51000
63 400
Taxable income
44600
Regular income tax
5840
Child tax credit (1000 x 6)
6000
Net regular tax
0
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