Question

In: Accounting

Gordon Ramsay’s butler is filling out his taxes for 2017. He has income of $ 104,700...

Gordon Ramsay’s butler is filling out his taxes for 2017. He has income of $

104,700 and

will file as HoH because he has one baby girl. He will take the standard deduction and use the

$1,000 child tax credit as well. The total amount withheld for federal taxes was $16,563.

a.

[7 pts]

How much is the total tax bill for the butler?

b Explain if the butler will owe tax or get a refund and determine how much (either

way).

C

Using no computations:

If the butler decided to marry a woman who has no

income in 2015, would this be a case of marriage penalty or

marriage bonus? Explain.

Solutions

Expert Solution

Answer Please paste this in Excel

Answers for a & b

Computation of Head of Household tax bill of Butler
Particulars Amount Note No.
Total Income                104,700.00
Total tax bill                  20,427.50 Note-1
Less: Child Tax Child                  (1,000.00)
Net Tax Bill                  19,427.50
Less: With Held for Federal Taxes                (16,563.00)
Net Tax Bill                  2,864.50
Note-1 Tax Calculation
Upto 13350 13350*10% 1335.00
$13,351 – $50,800 (50800-13350)*15% 5617.50
$50,801 – $104700 (104700-50800)*25% 13475.00
Total Tax 20427.50
Head of Household Tax rates for 2017
2017 Taxable Income Tax Rate
$0 – $13,350 10.00%
$13,351 – $50,800 15.00%
$50,801 – $131,200 25.00%
$131,201 – $212,500 28.00%
$212,501 – $416,700 33.00%
$416,701 – $444,550 35.00%
$444,551+ 39.60%

Answer C :

Here there is no impact with regard to Marriage and filling joint return since the Tax rates are same for HOH and Marriage and Filling Jointly .

If Butler files return seperately, then it would be marriage penality since tax rate for Marriaged and filling seperately are higher than Married and Filing Jointly

tax rate are as follows

Married Filing Jointly (& Surviving Spouse) for 2017
2017 Taxable Income Tax Rate
$0 - $18,650 10.00%
$18,651 – $75,900 15.00%
$75,901 – $153,100 25.00%
$153,101 – $233,350 28.00%
$233,351 – $416,700 33.00%
$416,701 – $470,700 35.00%
$470,701+ 39.60%
Married Individuals Filing Separate Returns
Income Tax rates
$0 – $9,325 10.00%
$9,326 – $37,950 15.00%
$37,951 – $76,550 25.00%
$76,551 – $116,675 28.00%
$116,676 – $208,350 33.00%
$208,351 – $235,350 35.00%
$235,351+ 39.60%

Related Solutions

The consolidated 2019, 2018, and 2017 income statements for Butler Corporation follow. Butler Corporation Consolidated Income...
The consolidated 2019, 2018, and 2017 income statements for Butler Corporation follow. Butler Corporation Consolidated Income Statements (in millions except per share amounts) 1 December 31 December 31 December 31 2 2019 2018 2017 3 Net sales $25,020.70 $21,970.00 $19,292.20 4 Costs and expenses: 5 Cost of goods sold (11,946.10) (10,611.70) (9,366.20) 6 Selling, general, and administrative (9,864.40) (8,721.20) (7,605.90) 7 Amortization of intangible assets (303.70) (265.90) (208.30) 8 Operating income $2,906.50 $2,371.20 $2,111.80 9 Interest expense (572.70) (586.10) (613.70)...
In 2017, XYZ Corporation has $75,000 of income before taxes in its accounting records.   In computing income...
In 2017, XYZ Corporation has $75,000 of income before taxes in its accounting records.   In computing income tax expense, XYZ makes the following observations of differences between the accounting records and the tax return: An accelerated depreciation method is used for tax purposes.  In 2017, XYZ reports $6,000 more depreciation expense for tax purposes than it shows in the accounting records. In 2017, XYZ collected $60,000 from a business that is renting a portion of its warehouse.  The $60,000 covers the rental payment...
Daze filed his personal income tax for 2016 on May 4, 2017. He did not have...
Daze filed his personal income tax for 2016 on May 4, 2017. He did not have any reasonable cause for delinquent tax filing. He also inadvertently left out his bonus income $20,000 from reporting on his tax return. His tax return without such bonus income shows $100,000 gross income. (1)   The IRS initiated its audit on Daze’s 2016 tax return on June 3, 2020. Does the IRS have authority to audit and possibly litigate Daze’s tax return on the omission...
Daze filed his personal income tax for 2016 on May 4, 2017. He did not have...
Daze filed his personal income tax for 2016 on May 4, 2017. He did not have any reasonable cause for delinquent tax filing. He also inadvertently left out his bonus income $20,000 from reporting on his tax return. His tax return without such bonus income shows $100,000 gross income. (1) The IRS initiated its audit on Daze’s 2016 tax return on June 3, 2020. Does the IRS have authority to audit and possibly litigate Daze’s tax return on the omission...
James has just jumped out of an airplane. After he opens his parachute he experiences 2...
James has just jumped out of an airplane. After he opens his parachute he experiences 2 forces: the constant force of gravity, and a wind drag that is proportional to his velocity. His height may therefore follow the equation: d2h/dt2 = -9.8 - 2(dh/dt). As a second-order differential equation, this is not technically solvable by separation of variables. However, because the variable h appears only in its derivatives, we can turn this into a first-order equation, and solve that by...
In 2017, XYZ Corporation has $75,000 of income before taxes in its accounting records.   In computing...
In 2017, XYZ Corporation has $75,000 of income before taxes in its accounting records.   In computing income tax expense, XYZ makes the following observations of differences between the accounting records and the tax return: An accelerated depreciation method is used for tax purposes. In 2017, XYZ reports $6,000 more depreciation expense for tax purposes than it shows in the accounting records. In 2017, XYZ collected $60,000 from a business that is renting a portion of its warehouse. The $60,000 covers...
Blackwater Company has a foreign branch that earns income before income taxes of $500,000. Income taxes...
Blackwater Company has a foreign branch that earns income before income taxes of $500,000. Income taxes paid to the foreign government are $150,000 or 30%. Sales and other taxes paid to the foreign government are $100,000. Blackwater Company must include the $500,000 of foreign branch income in determining its home country taxable income. In determining its taxable income, Blackwater can choose between taking a deduction for all foreign taxes paid or a credit only for foreign income taxes paid. The...
An astronaut wants to find out his mass while in orbit, to find out if he...
An astronaut wants to find out his mass while in orbit, to find out if he is staying healthy while in space. Since he can't use a bathroom scale (why not?), he attaches himself to a spring (k=2500 N/m), pulls himself back from the spring's equil length by 5 m, and times one oscillation to take 1 s. a.) What is the mass of the astronaut? ________ kg b.) Find the potential energy stored in the spring when it is...
In its proposed 2017 income statement, Whispering Winds Corp. reports income before income taxes $476,000, income...
In its proposed 2017 income statement, Whispering Winds Corp. reports income before income taxes $476,000, income taxes $76,160 (not including unusual items), loss on operation of discontinued music division $62,300, gain on disposal of discontinued music division $43,000, and unrealized loss on available-for-sale securities $141,000. The income tax rate is 16%. Prepare a correct statement of comprehensive income, beginning with income before income taxes.
Blue Company has a foreign branch that earns income beforeincome taxes of $500,000. Income taxes...
Blue Company has a foreign branch that earns income before income taxes of $500,000. Income taxes paid to the foreign government are $150,000 or 30%. Sales and other taxes paid to the foreign government are $100,000. Blue Company must include the $500,000 of foreign branch income in determining its home country taxable income. In determining its taxable income, Blue can choose between taking a deduction for all foreign taxes paid or a credit only for foreign income taxes paid. The...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT