Question

Abe and Betty are married and file a joint income tax return. Abe is 67 years old and Betty is 58 years old. Abe and Betty have no dependents. Abe and Betty have no tax credits and had $25,000 of federal income tax withheld from their paychecks. Other information needed to prepare Abe and Betty’s 2018 individual income tax return is as follows: Abe’s Salary $ 65,000 Betty’s Salary 85,000 Interest received on savings account 2,000 Interest received on State of Tennessee bond 3,000 Total Itemized Deductions 25,000 Calculate Abe and Betty’s: 1. Total income 2. Adjusted gross income 3. Taxable income 4. Tax 5. Taxes due or refund 6. Marginal tax rate 7. Average tax rate 8. Effective tax rate

Answer 1

Income	$                         155,000.00
Less: Exclusions	$                           (3,000.00)
Total Income	$                         152,000.00
Above the line deduction	$                                           -
AGI	$                         152,000.00
Standard deduction	$                           25,300.00
Taxable Income	$                         129,700.00
Tax Liability	$                           20,413.00
Prepayment	$                           25,000.00
Refund	$                              4,587.00