In: Accounting
Mark and Patricia report adjusted gross income of $410,000 and itemized deductions of $31,000 for the interest on their home acquisition mortgage (principal amount of $890,000 acquired in 2015), $14,000 in state and local taxes, and $38,000 in charitable contributions. They file a joint income tax return and have four dependent children under age 16. What is their taxable income for 2019 and allowable tax credits?
Taxes deduction limited to 10,000
Itemized deductions = 31,000 + 10,000 + 38,000 = 79,000
Particulars | Amount | Amount |
Gross income: | ||
Salary | $ 410,000 | |
Dividends | $ - | |
Capital loss deduction | $ - | |
Gross income | $ 410,000 | |
For AGI deductions | $ - | |
Adjusted gross income | $ 410,000 | |
Less: | ||
Standard deduction | $ 24,400 | |
Itemized deduction | $ 79,000 | |
Higher of the two | $ 79,000 | |
Taxable income | $ 331,000 | |
Income tax liability | $ 68,553.00 | |
[ 65497 + ( 331000 - 321450 ) × 0.32 ] |
Taxable income is 331,000.
Allowable tax credits = 2,000 per child * 4 = 8,000