In: Accounting
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.
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% |