Question

Scenario:

Steve and Kathy Williams are married and earned salaries of $55,000 and $45,000. Their address is One John Marshall Drive, Huntington, WV, 25755. In addition to their salaries, they received interest of $450 from City of Huntington Bonds and $3,500 of interest from corporate bonds. During 2019, Kathy lost her job and was paid unemployment compensation of $4,500. She also received alimony of $15,000 from a previous marriage. (Assume the divorce occurred before the Tax Cuts and Jobs Act.) Each of them contributed $2,500 to their individual retirement accounts and Steve paid student loan interest of $1,850. The couple have a five-year-old son Chase and a 3-year-old daughter Gabby, who lived with them the entire year. (Assume they are allowed to claim a $2,000 tax credit for each of their children.) Lastly, the couple paid $18,000 worth of expenditures that qualify as itemized deductions and had federal withholding of $7,650. prepare their 2019 Income tax Return.

US Tax

Answer 1

Statement showing Income Tax payable by Steve & Kathy Williams for the year 2019 married filing jointly

Particulars	Amount $	Amount $	Explanation if any
Salaries : Steve	55000
: Kathy [45000+ Unemp. Allowance 4500]	49500
Alimony Kathy	15000		Taxable
Interest on City of Huntinton Bonds [$450]	Exempt
Interest on Other Corporate Bonds	3500
Total AGI [a]		123000
Less Expenses
Contribution to Retirement A/c [2500x2]	5000
Student Loan Interest paid by Steve	1850
Children Tax Credit [2000*2]	4000
Other Eligible Deductions [as per given info]	18000
Federal Withhold	7650
Total Itemised Deductions [b]		36500	Will go for itemised deductions as are greater than standard deduction 12200x2=24400
Net Taxable Income [a-b]		86500

Calculation of Income Tax Payable on Net Taxable Income $ 86500

Tax Rate	Income Slab $	Income $	Tax Payable $
10%	0 to 19400	19400	1940
12%	19400 to 78950	59550	7146
22%	78950 to 86500	7550	1661
		Total	10740