comprehensive problem, Jennifer and Janson Greco are married and file a joint ta
ID: 2455247 • Letter: C
Question
comprehensive problem, Jennifer and Janson Greco are married and file a joint tax return. Their two dependent children (ages 14 and 16) both live in at home. The Grecos have the following income and expenses
Income
Jennifer’s salary 120,000
Jason’s net profit from his sole proprietorship 148,000
Interest income on state of taxes bonds 10,000
Interest income on corporate bond 12,000
Cash dividend 19,000
Long term capital gain from state of stock 70,000
Expenses
Interest on the 850,000 principal from their Home acquisition mortgage 48,000
Real property taxes on their home 11,000
Charitable contributions to their church 49,000
Federal income tax withheld from jenifer’s salary 35,000
Estimated federal tax payments for this year 30,000
What is their adjusted gross income and taxable income for 2015?
What is their net tax due or refund expected for 2015?
Using the total tax you compound in part b, what is their effective tax rate as a percentage of their adjusted gross income?
Explanation / Answer
Jennifer’s salary 120,000
Jason’s net profit from his sole proprietorship 148,000
Interest income on state of taxes bonds 10,000
Interest income on corporate bond 12,000
Cash dividend 19,000
Long term capital gain from state of stock 70,000
Expenses
Interest on the 850,000 principal from their Home acquisition mortgage (48,000)
Deduction :Charitable contributions to their church (49,000)
Taxable income 282,000
Tax payable:
70,000@20% = $14,000
Remaining income $282,000 - $70,000 = $ 212,000
$ 212,000 - $ 151,200 = $ 60,800@ 28% = 17024
Total tax payable on $ 212,000 including long term gain = $ 29387.50 + $17,024 + $ 14,000= $ 60,411.5
Tax paid = $ 30,000
Tax to be paid = $ 60,411.5 - $ 30,000 = $ 30,411.5
Effective tax rate = $ 60,411.5/$282,000 = 21.42%
Federal income tax withheld from jenifer’s salary 35,000
Estimated federal tax payments for this year 30,000
$0 to $18,450 10% $18,451 to $74,900 $1,845.00 plus 15% of the amount over $18,450 $74,901 to $151,200 $10,312.50 plus 25% of the amount over $74,900 $151,201 to $230,450 $29,387.50 plus 28% of the amount over $151,200Related Questions
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