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%

ekkarill92 answered 9 months ago
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