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Problem 1: Calculate personal income taxes for a young engineer for years 1,7, and 10 after graduation. Note in year 1 he/she is single (no home); in year 7 he/she is married (both working, no home); and in year 10 he/she is still married with two children and owns a home. Other financial information is provided on the Homework Assignment #8 Template. Note that state taxes were estimated for this problem. They vary from state to state. Use the tax tables and standard deductions mentioned in the book. The actual values change often, even if just to account for inflation. So use the book values

Problem 1 Data
Family Status Your Age Year Est. Gross Income 401k IRA State Taxes Mortgage interest Property Taxes Donations
single 25 1 75000 7500 3000 3750
single 26 2 78000 7800 3120 3900
single 27 3 81000 8100 3240 4050
single 28 4 84000 8400 2000 3360 4200
single 29 5 88000 8800 2000 3520 4400
single 30 6 91000 9100 2000 3640 4550
married 31 7 180000 18000 4000 7200 9000
married 32 8 187000 18700 4000 7480 24000 5000 9350
married + child 33 9 195000 19500 4000 7800 24000 5100 9750
married + 2 children 34 10 200000 20000 4000 8000 24000 5202 10000

Problem 1 Federal Taxes Year 1 Year 7 Year 10 Gross Inc 401k RA Other defened Ad. Gross Dependents ol ol See text Standard De

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Answer #1
Federal Taxes Year 1 Year 7 Year 10
Gross Income 75000 180000 200000
401K 7500 18000 20000
IRA 0 4000 4000
Other deffered 0 0 0
Adj. Gross ( A ) 82500 198000 220000
Dependents 0 1 3
Standard Deduction (assumption) 40000 40000 40000
Mortgage Interest 0 0 24000
Donations 3750 9000 10000
State Taxes 3000 7200 8000
Prop. taxes 0 0 5202
Other 0 0 0
Total deductions ( B ) 46750 56200 87202
Taxable Inc ( A-B ) 35750 141800 132798
(from Table)

Since The Tax rates and Standard deductions amount is not provided , the figures are being taken on assumption basis.

The total Taxable income will be net of Total gross income minus total deductions.

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