Question

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 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.)

Answer 1

Under the Tax Cuts and Jobs Act 2017, the personal exemptions are eliminated and itemized deductions are reduced. The brackets and income slabs under the Tax Cuts and Jobs Act 2017 are attached below:

So the given income is $100000 and there is itemized deduction of $10000, thus the adjusted gross income is $90000. so the tax owed will be calculated as follows:

On first $9525, tax will be @10% = $952.5

On next $29175 (38700 - 9525), tax will be @12% = $3501

On next $43800 (82500 - 38700 ), tax will be @22% = $9636

On next $7500 (90000 - 82500), tax will be @24% = $1800

so total tax owed = 952.5 + 3501 + 9636 + 1800 = $15889.5