Question

Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy’s employer withheld $11,000 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $23,000 in itemized deductions. (Use the tax rate schedules.)

Assume that in addition to the original facts, Jeremy has a long-term capital gain of $4,000. What is Jeremy’s tax refund or tax due including the tax on the capital gain? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Schedule Z-Head of Household If taxable income is over: But not over: The tax is: $ 0 $ 13,850 10% of taxable income $ 13,850 $ 52,850 $1,385 plus 12% of the excess over $13,850 $ 52,850 $ 84,200 $6,065 plus 22% of the excess over $52,850 $ 84,200 $160,700 $12,962 plus 24% of the excess over $84,200 $160,700 $204,100 $31,322 plus 32% of the excess over $160,700 $204,100 $510,300 $45,210 plus 35% of the excess over $204,100 $510,300 - $152,380 plus 37% of the excess over $510,300

Answer 1

	Description	Amount
(1)	Gross income	110,000
(2)	For AGI deductions	-
(3)	Adjusted gross income	110,000
(4)	Standard deduction	18,350
(5)	Itemized deduction	23,000
(6)	Greater of standard deduction or itemized deduction	23,000
(7)	Taxable income	87,000
(8)	Income tax liability	13,634
(9)	Child tax credit	2,000
(10)	Tax withholding	11,000
(11)	Tax due	634
Note
Computation of icome tax liability
Taxable income	87,000
Tax on 84,200	12,962
Tax on balance(87,000-84,200=2,800) @24%	672
Total tax liability	13,634