Martin and Joanne file a joint tax return. Their combined income and deductions are $150,000 salary...

Martin and Joanne file a joint tax return. Their combined income and deductions are $150,000 salary income, $4,500 municipal bonds interest income, $5,000 long-term capital gains, and $20,000 allowable itemized deductions. Calculate their taxable income and gross income tax liability for 2018.

Expert Solution

Note: Assuming Martin and Joanne are married so will file a joint tax return.

	USD
Income:
Wages, salaries etc.	150,000
Municipal bonds interest income	4,500
Long term capital gains	5,000

Total Income	159,500

****Standard Deduction or itemized deduction allowed	24,000
****$20,000 allowable itemized deductions which ever is higher. Hence taken $24,000

Taxable Income will be:
Adjusted gross income	159,500
Standard or itemized deduction	24,000
Taxable Income	135,500
****Hence, this taxable income fall under 22% of Marginal tax rate.
Total Tax to be paid	21,339

ekkarill92 answered 2 years ago

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