Question

Jeremy earned $101,600 in salary and $7,600 in interest income during the year. Jeremy’s employer withheld $11,000 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $30,200 in itemized deductions. (Use the tax rate schedules for 2020)

a. Determine Jeremy’s tax refund or taxes due.

Description Amount

(1) Gross income =

(2) For AGI deductions =

(3) Adjusted gross income =

(4) Standard deduction =

(5) Itemized deductions =

(6) Greater of standard deduction or itemized deductions =

(7) Taxable income =

(8) Income tax liability =

(9) Child tax credit =

(10) Tax withholding =

Taxes due =

Answer 1

Computation of taxable income and Tax payable of Jeremy for 2020

Sr No	Particulars	Amounts in $
1	Gross Income($101,600 salary + $7,600 interest income)	1,09,200.00
2	For AGI Deduction	-
3	Adjusted Gross Income (1)-(2)	1,09,200.00
4	Standard Deduction	18,650.00
5	Itemized deductions	30,200.00
6	Higher of standard deductions or itemized deductions	30,200.00
7	Taxable Income (3) – (6)	79,000.00
8	Income Tax Liabilities ($6,162 +(79000-53700)*22%	11,728.00
9	Child tax Credit	2,000.00
10	Tax Withholding	11,000.00
11	Tax payable (Refund)= (8) - (9) + (10)	(1272.00)

Hence jeremy is elegible for Tax Refund of $1,272 for the year 2020.

Notes

• Standard Deduction for Head of Household for the year 2020 is $18,650.
• Child Tax Credit In given case Would be $2,000 per qualifying child
• The tax rate schedules for 2020 has been used while calculating taxability of jeremy