The Benjamin family had wage earnings of $199,000 in 2015. They received interes
ID: 2811150 • Letter: T
Question
The Benjamin family had wage earnings of $199,000 in 2015. They received interest of $4,500 on corporate bonds and $1,500 on bonds issued by the state. Their dividend income was $500, and they had a $1,000 long-term capital gain on the sale of securities. They paid real estate taxes of $1,450 and state income tax of $3,000, and they donated $550 to their church. They paid interest of $8,000 on their home mortgage. They have one dependent child. The exemption rate is $4,000 per person. Capital gains tax rate is 15%.
What was their tax liability for 2015 assuming they file jointly as a married couple? Use the Personal Tax Schedules given above. Round the answer to the nearest cent.
Single Individuals Married Couples Filing Jointly Income ($) Rate (%) Income ($) Rate (%) 0-9,225 10 0-18,450 10 9,225-37,450 15 18,450-74,900 15 37,450-90,750 25 74,900-151,200 25 90,750-189,300 28 151,200-230,450 28 189,300-411,500 33 230,450-411,500 33 411,500-413,200 35 411,500-464,850 35 Over 413,200 39.6 Over 464,850 39.6Explanation / Answer
Wages $ 199,000 Interest on Corporate Bond $ 4,500 Interest on Bonds Issued by state $ 1,500 Dividend Income $ 500 a) AGI $ 204,000 Real Estate Taxes Paid $ 1,450 State Income tax Paid $ 3,000 Contribution $ 500 Interest Paid on Home mortgage $ 8,000 b) Total Itemized Deduction $ 12,950 c) Standard Deduction $ 12,600 d) Exepmtion 3 x 4000 $ 12,000 Total Taxable Income = a-b-d $ 179,050 0-18,450 $ 1,845 18,450-74,900 = 15% x 56450 $ 8,468 74,900-151,200 = 25% x 76300 $ 19,075 151,200-179050 = 28% x 27850 $ 7,798 Income Tax $ 37,186 e) Tax on long Term Capital Gains on the Sale of Securitites = 1000 x15% $ 150 f) Total Income Tax (e)+(f) $ 37,336 Less Credit $ 1,000 Total Tax Liability $ 36,336
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