Question

The following information is available for Bob and Brenda Horton, a married couple filing a joint return for 2019. Both Bob and Brenda are 32 and have three dependents.

Salaries                                                  200,000

Interest income from NYS bonds                 10,000

Interest income from US bonds     3,000

Long term capital gain                                   7,000

Short term capital loss                                  12,000

Deductible IRA contributions                          4,000

Itemized deductions                                   14,000                                                       

Withholding of Federal tax                           50,000

Compute their AGI, taxable income, and tax due or refund due.

Answer 1

Particulars	Amount	Amount
Salaries		$    200,000
Interest from NYS bonds - Not taxable		$               -
Interest from US bonds		$         3,000
Long-term capital gain	$    7,000
Less: short-term capital loss	$ 12,000
Net short-term capital loss	$ (5,000)
Less: deduction during the year	$    3,000	$       (3,000)
Carryover loss to next year	$ (2,000)	$               -
Gross income		$    200,000
Less: IRA deduction		$         4,000
AGI		$    196,000
Less: higher of
Standard deduction	$ 24,400
Itemized deductions	$ 14,000	$      24,400
Taxable income		$    171,600
Tax applicable		$      29,533
($171,600-$168,400)*24%+$28,765
Less: tax withheld		$      50,000
Refund		$      20,467

AGI is $196,000

Taxable income is $171,600

Tax refund is $20,467.

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