Question

[The following information applies to the questions displayed below.) Jeremy earned $102,300 in salary and $8,300 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 $33,700 in itemized deductions. (Use the tax rate schedules.) b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $15,050. 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.) Answer is complete but not entirely correct. (2) (3) (4) Description Gross income For AGI deductions Adjusted gross income Standard deduction Itemized deductions Greater of standard deduction or itemized deductions Taxable income Income tax liability Child tax credit Tax withholding Tax due Amount $ 125,650 0 $ 125,650 18,650 33,700 33,700 S 91.950 s 13,484 2,000 11,000 XS 484 % (6) (7) (8) (9) (10)

Answer 1

Answer (b)
Computation of taxable income and Tax payable
Sr No	Particulars	Amount in $
1	Gross Income($102,300 salary + $8,300+interest income+$15,050 long term capital gain )	1,25,650
2	For AGI Deduction	-
3	Adjusted Gross Income (1)-(2)	1,25,650
4	Standard Deduction	18,650
5	Itemized deductions	33,700
6	Higher of standard deductions or itemized deductions	33,700
7	Taxable Income ((3) –(6))	91,950
8	Income Tax Liabilities See Note	13,534
9	Child tax Credit	2,000
10	Tax Withholding	11,000
	Tax Due (8) -(9)+(10)	534

Notes

1. Calculation of Taxability

Particulars	Amount	Calculation	Amount
Tax On Normal taxable Income	76,900.00	$6,172+[($76,900-$53,700)*22%]	$11,276
Tax On capital Gain	15050	$15,050*15%	$2,258
Taxable Income	91,950.00	Taxability	$13,534

2. Standard Deduction for Head of Household for the year 2020 is $18,650.

3. Child Tax Credit In given case Would be $2,000 per qualifying child

4.The tax rate schedules for 2020 has been used while calculating taxability of jeremy i .e.

  
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