Question

Jeremy earned $100,000 in salary and $6,000 in interest income during the year.

Jeremy’s employer withheld $11,200 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 $23,000 in itemized

Deductions.

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

b) Assume that in addition to the original facts, Jeremy has a long-term capital

   gain of $4,000. What is Jeremy’s tax refund or tax due including the tax on the

   capital gain?

Answer 1

a)

Description	Amount ($)	Computation
1) Gross Income	106000	(100000+6000)
2) For AGL Deductions	0
3) Adjusted Gross Income	106000	(1) - (2)
4) Standard Deduction	18000	Head of Household
5) Itemised Deduction	23000
6) Greater of standard deduction or itemized deduction	23000
7) Personal and dependency exemptions	0	Repealed in 2018
8) Taxable income	83000
9) Income tax liability	12818	12698+(83000-82500)*24%
10) Child Tax Credit	2000
11) Tax Witheld	11200
12) Refund due	-382	(9) -(10) - (11)

b)

Assume that in addition to the original facts, Jeremy has a long-term capitalb)

   gain of $4,000. What is Jeremy’s tax refund or tax due including the tax on the

   capital gain?

Description	Amount ($)	Computation
1) Gross Income	110000	(100000+6000+4000)
2) For AGL Deductions	0
3) Adjusted Gross Income	110000	(1) - (2)
4) Standard Deduction	18000	Head of Household
5) Itemised Deduction	23000
6) Greater of standard deduction or itemized deduction	23000
7) Personal and dependency exemptions	0	Repealed in 2018
8) Taxable income	87000	(3) - (6) - (8)
9) Income tax liability	13418	12698+(83000-82500)*24% + (4000*15%)
10) Child Tax Credit	2000
11) Tax Witheld	11200
12) Taxes due	218	(9) -(10) - (11)