Question

Jeremy earned $102,500 in salary and $8,500 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 $34,700 in itemized deductions. (Use the tax rate schedules.)

Schedule Z-Head of Household

If taxable income is over:	But not over:	The tax is:
$          0	$ 14,100	10% of taxable income
$ 14,100	$ 53,700	$1,410 plus 12% of the excess over $14,100
$ 53,700	$ 85,500	$6,162 plus 22% of the excess over $53,700
$ 85,500	$163,300	$13,158 plus 24% of the excess over $85,500
$163,300	$207,350	$31,830 plus 32% of the excess over $163,300
$207,350	$518,400	$45,926 plus 35% of the excess over $207,350
$518,400	—	$154,793.50 plus 37% of the excess over $518,400

b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $16,050. What is Jeremy’s tax refund or tax due including the tax on the capital gain?

Answer 1

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Explanation (102,500 + 8,500 + 16,050) Answer b No. Particulars 1 Gross income 2 For AGI deductions 3 Adjusted gross income 4 Standard deduction 5 ltemized deductions 6 Greater of standard deductions or itemized deductions 7 Taxable income 8 Income tax liability 9 Child tax credit 10 Tax withholding Taxes Due (1-2) For Head of Household, Tax year 2020 (Given in o) $ 127,050 0 127,050 18,650 34,700 34,700 92,350 13,542 2,000 11,000 542 (3-6) See note $2,000 is allowed for one qualifying dependent child (Given in o) Notes: Tax on Normal Income of $76,300 (92,350 - 16,050) 6,162 + ((76,300 - 53,700)]*22% 11,134 Tax on LTCG (16,050 * 15%) 2,408 Income Tax Liability 13,542