Mr. and Mrs. L are married with no dependent children. Mr. L worked for Smart Te

Question

Mr. and Mrs. L are married with no dependent children. Mr. L worked for Smart Tech Corporation Computer Associates the remainder of the year. Mrs. L finished her degree in November and immediately began as an associate with Smith and Weber. They report the following information for 2017. Use Individual Tax Rate Schedules and Standard Deduction Table Mr. L's salary from Smart Tech Mr. L's salary from Computer Associates Mrs. L's salary from Smith and Weber Interest from savings account Itemized deductions Dividends eligible for 15% rate 32,00 122,000 15,5se 700 9,000 ,200 2 a. Compute AGI. b. Compute taxable income. c. Compute net tax liability (after credits) if they file a joint return s below. Complete this question by entering your answers in the tab Required A Required B Required C Compute AGI Next >

Explanation / Answer

a. Computation of AGI Particulars Amount Mr. L's salary from Smart Tech $32,000 Mr. L's salary from Computer Associates $122,000 Mrs. L's salary from Smith and Weber $15,550 Interest from savings account $700 Dividends $2,200 Adjusted Gross Income $172,450 b. Computation of Taxable Income AGI $172,450 Less: Standard Deduction $12,700 Less: Personal Exemption $8,100 Taxable income $151,650 Note: Itemized deduction is $9,000 which is less than standard deduction of $12,700, so to reduce tax liability standard deduction is taken. c. Computation of Net tax liability Income tax on Dividend ($2,200 x 15%) $330 Income tax on ordinary income Income upto $75,900 $10,452.50 Income from $75,900 - $149,450 ($73,500 x 25%) $18,387.50 Less: Excess Social Security tax ($1,984) Net tax liability $27,186.00 Excess Social Security tax ($32,000 x 6.2%) $1,984 When an employee work under two or more employers, he can claim excess social security tax as credit on his income

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