Question

1. Determine George and Mary’s taxable income and tax liability for 2017 if George has $65,000 and Mary has $45,000 of salary income, they have $24,000 of allowable itemized deductions, no dependents, and file a joint tax return.

2. Carrie and Stephen have gross salary and wages of $76,000 in 2017 and file a joint return, claiming two personal exemptions and one dependency exemption for their seven-year-old child. They have $15, 000 of allowable itemized deductions and a $240 child care credit. Determine their taxable income and their tax liability.

3. Carolyn has a 50 percent interest in a general partnership that has a $14,000 loss for the year. She materially participated in the partnership. Her basis in the partnership is $10,000. She also has salary from other employment of $46,000. If she is single, has no dependents, and claims the standard deduction, what is her taxable income and her tax liability in 2017?

Answer 1

1.)

            George’s salary income        = 65000

Add: Mary’s salary income               = 45000

          Gross Income                            = 110000

Less: Allowable deduction                = 24000

Less: Personal exemption (4050*2) =8100

                     Net taxable income       = 77900

Taxable Liability = (18650*10%) + (57249*15%) + (2000*25%) = 10,452.50 + 500 = $10952.50

2)

           Carrie and Stephen’s gross salary and wages     = 76000

    Less: Allowable deduction                                             = 15000

    Less: Personal and Dependent Deduction (4050*3) = 12150

            Net taxable income                                                 = 48850

     Tax liability = (18650*10%) + (30200*15%) = 1865 + 4530 = $6395

Less: Child care tax credit                                                                   = 240

                                                                                    Net tax liability = $6155

3)

      Carolyn’s salary income                = 46000

Less: share of loss from partnership = 7000

Less: standard deduction                    = 6350

Less: Personal exemption                   = 4050

                      Net taxable income        = 28600

Tax Liability: (9325*10%) + (19275*15%) = 932.50 + 2891.25 = $3823.75