Question

Jeremy earned $100,200 in salary and $6,200 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 $23,200 in itemized deductions.

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

(1)	Gross income		$106,400
(2)	For AGI deductions		0
(3)	Adjusted gross income		$106,400
(4)	Standard deduction		18,350
(5)	Itemized deductions		23,200
(6)	Greater of standard deduction or itemized deductions selected answer correct		23,200
(7)	Taxable income		83,200
(8)	Income tax liability
(9)	Child tax credit		2,000
(10)	Tax withholding		11,000
Tax refund

B. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $4,550. What is Jeremy’s tax refund or tax due including the tax on the capital gain

1)	Gross income
(2)	For AGI deductions
(3)	Adjusted gross income		$0
(4)	Standard deduction
(5)	Itemized deductions
(6)	Greater of standard deduction or itemized deductions selected answer correct
(7)	Taxable income		$0
(8)	Income tax liability
(9)	Child tax credit
(10)	Tax withholding
Tax due

Answer 1

A

Particulars	Amount	Amount
Gross income:
Salary	$        100,200
Interest	$            6,200
Other income	$                   -
Gross income		$        106,400
For AGI deductions		$                   -
Adjusted gross income		$        106,400
Less:
Standard deduction	$          23,200
Itemized deduction	$                   -
Higher of the two		$          23,200
Taxable income		$          83,200
Income tax liability		$    12,742.00
[ 6065 + ( 83200 - 52850 ) × 0.22 ]
Payments:
Withholding	$          11,000
Child tax credit	$            2,000
Total payments		$          13,000
Refund due		$                258

B

Particulars	Amount	Amount
Gross income:
Salary	$        100,200
Interest	$            6,200
LTCG	$            4,550
Gross income		$        110,950
For AGI deductions		$                   -
Adjusted gross income		$        110,950
Less:
Standard deduction	$          23,200
Itemized deduction	$                   -
Higher of the two		$          23,200
Taxable income		$          87,750
Income tax liability		$    13,424.50
[ 6065 + ( 83200 - 52850 ) × 0.22 ] +4550 *15%
Payments:
Withholding	$          11,000
Child tax credit	$            2,000
Total payments		$          13,000
Tax payable		$                425

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