Great Deal! Get Instant $10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

Several years have gone by since Harry and Belinda graduated from college and started their working careers. They both earn good salaries. They believe that they are paying too much in federal income...

1 answer below »
Several years have gone by since Harry and Belinda graduated from college and started their working careers. They both earn good salaries. They believe that they are paying too much in federal income taxes. The Johnsons’ total income last year included Harry’s salary of $63,000 and Belinda’s salary of $84,000. She contributed $3,000 to her 401(k) for retirement. She earned $400 in interest on savings and checking and $3,000 interest income from the trust that is taxed in the same way as interest income from checking and savings accounts. Harry contributed $3,000 into a traditional IRA.
  • a) What is the Johnsons’ reportable gross income on their joint tax return?
  • b) What is their adjusted gross income?
  • c) What is the total value of their exemptions?
  • d) How much is the standard deduction for the Johnsons?
  • e) The Johnsons are buying a home that has monthly mortgage payments of $3,000, or $36,000 a year. Of this amount, $32,800 goes for interest and real estate property taxes. The couple has an additional $14,000 in itemized deductions. Using these numbers and Table 4-3, calculate their taxable income and tax liability.
  • f) Assuming they had a combined $18,000 in federal income taxes withheld, how much of a refund will the Johnsons receive?
  • g) What is their marginal tax rate?
  • h) Based on gross income, what is their average tax rate?
  • i) List three additional ways that the Johnsons might reduce their tax liability next year.
Answered Same Day Dec 24, 2021

Solution

David answered on Dec 24 2021
111 Votes
Answers:
Computation of Adjusted Gross Income of Johnsons’ on their joint tax return:
Sr.
No.
Particulars Amount in $
1 Income from Salary
Ha
y 63,000
Belinda 84,000
Total 1,47,000
2 Interest on Savings and Checking 400
3 Interest from trust 3,000
Total Gross Income 1,50,400
Less: Adjustments to Income
i) Contribution to Ha
y’s IRA (3,000)
ii) Contribution to Belinda’s Retirement A/c (3,000)
Adjusted Gross Income 1,44,400
a) The reportable gross income on Johnsons’ joint tax return is $ 150,400
) The Adjusted Gross Income is $ 1,44,400
c) Total Value of exemptions is $ 6,000 (3000+3000)
d) The Standard Deduction amount for Johnsons’ joint tax return is $ 12,200
e) Calculation of taxable Income and Tax...
SOLUTION.PDF
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers