You will need to reference the Tax Cuts and Jobs Act of 2017 (Links to an...

You will need to reference the Tax Cuts and Jobs Act of 2017 (Links to an external site.) to solve the questions in this assignment. The questions below also rely on the following assumptions:

You file your taxes as a single filer.
Your only taxable source of income is wage income.
In 2017 you earned $100,000 of gross wage income.
In 2017 you claimed one personal exemption.
In 2017 you claimed itemized deductions of $10,000.

A) Calculate the amount of federal income tax you owed on your 2017 income using the brackets and income under the previous tax law. (Hint: Make sure to account for exemption and deductions.)

B) Calculate the amount of federal income tax you would have owed on your 2017 income using the brackets and income under the new tax law. (Hint: make sure to adjust for changes in personal exemption and deductions.)

C) Calculate the effective tax rate under the previous law given your answer to question 1 and also under the new tax law. Analyze at least two factors that caused the effective tax rate to change. Explain your answer.

Solutions

Expert Solution

Computation of Taxable Income for 2017
Gross Income	$100000.00
Less: Itemised Deduction	$6350.00
Less: Personal Exemption for 2017	$4,050.00
Taxable Income	$89600.00
tax 952510% =952.5 2917520% = 3501 4380022% = 9636 89600-82500 = 7100 24% =1704
total tax = 15793.5
Hence, a) His Personal Exemption Amount will be $4050
b): His Taxable Income will be $ 85950

For 2017, taxpayers can claim a personal exemption of $4,050 each for themselves, their spouses and any dependents.they can either itemize deductions or take a standard deduction based on their filing status: $6,350 for singles

Computation of Taxable Income new tax law
Gross Income	$100000.00
Less: Itemised Deduction	$12000.00
Less: Personal Exemption for 2017	-
Taxable Income	$88000.00
952510% = 952.5 2917415% = 4376.25 88000-38700= 49300*25%= 12325
totax tax = 17653.75
Hence, a) His Personal Exemption Amount will be nil in 2018
b): His Taxable Income will be $90000

For 2018–2025, the TCJA suspends personal exemptions but doubles the standard deduction amounts to $12,000 for singles

Single Filer
Current Law	Tax Cuts and Jobs Act
10%	$0-$9,525	10%	$0-$9,525
15%	$9,525-$38,700	12%	$9,525-$38,700
25%	$38,700-$93,700	22%	$38,700-$82,500
28%	$93,700-$195,450	24%	$82,500-$157,500

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

You will need to reference the Tax Cuts and Jobs Act of 2017 (Links to an...

You will need to reference the Tax Cuts and Jobs Act of 2017 (Links to an external site.) to solve the questions in this assignment. The questions below also rely on the following assumptions: You file your taxes as a single filer. Your only taxable source of income is wage income. In 2017 you earned $100,000 of gross wage income. In 2017 you claimed one personal exemption. In 2017 you claimed itemized deductions of $10,000. Calculate the amount of federal...

Tax Legislation Discuss the implications of the tax cuts and jobs of 2017 in reference to...

Tax Legislation Discuss the implications of the tax cuts and jobs of 2017 in reference to individuals, corporations, estates and trust. Make a concerted effort to highlight the critical elements that constitutes this new legislation.

The Tax Cuts and Jobs Act of 2017 is a major overhaul of the tax codes...

The Tax Cuts and Jobs Act of 2017 is a major overhaul of the tax codes in nearly three decades: it has generated a lot of debates on its potential impacts on economic growth, budget and sustainability, and equality and fairness etc. For our purpose, focus your discussion on the corporate side: What would be possible impacts of some of the specific provisions on the corporate FCF, WACC, and Valuation? What would be the possible impacts of some of the...

In December 2017, the US senate passed the tax cuts and jobs act of 2017. The...

In December 2017, the US senate passed the tax cuts and jobs act of 2017. The act is effectively altering the rate of taxation for individuals and businessss. Describe the potential effects of this major tax reform on the US further economic growth. Use markets for loanabke funds and foreign currency exchange in your answer.

In December 2017, the U.S. Senate passed the Tax Cuts and Jobs Act of 2017. The...

In December 2017, the U.S. Senate passed the Tax Cuts and Jobs Act of 2017. The act is effectively altering the rate of taxation for individuals and businesses. Describe the potential effects of this major tax reform on the the U.S. future economic growth. Please include examples from markets for loanable funds and foreign currency exchange.

1.The Tax Cuts and Jobs Act of 2017 reduced the corporate income tax rate to a...

1.The Tax Cuts and Jobs Act of 2017 reduced the corporate income tax rate to a 21% flat rate. True False 2. The Tax Cuts and Jobs Act of 2017 eliminated the child tax credit. True False 3. A taxpayer can deduct pass-through losses on his Form 1040. However, he must pass all these limitations in order to deduct the losses, except the A.basis limitation. B.the limitation on the number of children he has. C .at-risk limitation. D.passive loss limitation.

As a result of the tax cuts and jobs act of 2017, there are now due diligence requirements for

Prior to the passing of the Tax Cuts and Jobs Act (2017) some of America’s largest...

Prior to the passing of the Tax Cuts and Jobs Act (2017) some of America’s largest corporations were able to apply questionable, yet legal, schemes to book profits in offshore accounts to avoid (not evade) higher levels of tax expense. These tax savings were substantial, it is estimated multinational corporations had been able to avoid an estimated $90 billion in federal income taxes each year. Scenario: The Board of Directors, shareholders, and stakeholders are just now learning that the corporation...

2. In December 2017, the US Administration passed the Tax Cuts and Jobs Act (TCJA). This...

2. In December 2017, the US Administration passed the Tax Cuts and Jobs Act (TCJA). This lowered the top marginal corporate tax rate from 35% to 21%. (a) What is the definition/interpretation of the “marginal tax rate”? ( b) According to the neoclassical model of investment, what should the US corporate tax rate cut have achieved? (c) Give an explanation of how you might use this is a natural experiment to examine the effect of the corporate taxes on investment....

What are the positives and negatives of the "Tax Cuts and Jobs Act"?

Subjects