Question

Jeremy earned $270,000 in salary and $8,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $21,000 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the tax rate schedules.). (Do not round intermediate calculations. Round "Income tax liability" to 2 decimal places.) MUST USE 2017 TAX RATE !!!!!!!!!!!!!!!!!! ​1) What is Jeremys income tax liability? 2) Assume that in addition to the original facts, Jeremy has a long-term capital gain of $13,000. What is Jeremy’s tax liability including the tax on the capital gain? 3) Assume the original facts except that Jeremy had only $8,000in itemized deductions. What is Jeremy’s total income tax liability?

Answer 1

1) Calculation income tax liability :-

Particulars	Amount($)	Working
Income from All Sources	278000	($270000+$8000)
Excluded or Deferred Income	0
Gross Income	278000
For AGI Deductions	0
Adjusted Gross Income	278000
Standard Deduction	9350	Heas of Household
Itemized Deduction	21000
Greater of Standard or Itemized Deduction	21000	$21000>$9350
Personal and Dependancy Exemptions	12150	$4050*3
Taxable Income	244850	(278000-21000-12150)
Income Tax Liability	60492	$49816.50+(($244850-212500)*33%)

2) Calculation of Income Tax Liability :-

Particulars	Amount($)	Working
Income from All Sources	291000	($270000+$8000+$13000)
Excluded or Deferred Income	0
Gross Income	291000
For AGI Deductions	0
Adjusted Gross Income	291000
Standard Deduction	9350	Heas of Household
Itemized Deduction	21000
Greater of Standard or Itemized Deduction	21000	$21000>$9350
Personal and Dependancy Exemptions	12150	$4050*3
Taxable Income	257850	(291000-21000-12150)
Income Tax Liability	64782	$49816.50+(($257850-212500)*33%)

3) Calculation of Income Tax Liablity :-

Particulars	Amount($)	Working
Income from All Sources	278000	($270000+$8000)
Excluded or Deferred Income	0
Gross Income	278000
For AGI Deductions	0
Adjusted Gross Income	278000
Standard Deduction	9350	Heas of Household
Itemized Deduction	8000
Greater of Standard or Itemized Deduction	9350	$8000<$9350
Personal and Dependancy Exemptions	12150	$4050*3
Taxable Income	256500	(278000-9350-12150)
Income Tax Liability	64336.5 or 64337	$49816.50+(($256500-212500)*33%)