Problem 1-5 The Tax Formula for Individuals, Filing Status and Tax Computation, The Standard Deduction (LO...
Problem 1-5
The Tax Formula for Individuals, Filing Status and Tax Computation,
The Standard Deduction (LO 1.3, 1.5, 1.7)
Diego, age 28, married Dolores, age 27, in 2018. Their salaries for the year amounted to $47,230 and they had interest income of $3,500. Diego and Dolores' deductions for adjusted gross income amounted to $2,000; their itemized deductions were $16,000, and they have no dependents.
Table for the standard deduction
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a. What is the amount of their adjusted gross
income?
$ _____
b. In order to minimize taxable income, Diego and Dolores will take the standard deduction in the amount of $ _____
c. What is the amount of their taxable
income?
$ _____
d. What is their tax liability for 2018?
$ _____
Homework Answers
a.
Adjusted gross income = Salaries + Interest income - Deductions for AGI = $47,230 + $3,500 - $2,000 = $48,730
b.
Standard deduction = $24,000
c.
Taxable income = Adjusted gross income - Standard deduction = $48,730 - $24,000 = $24,730
d.
Tax liability for 2018 = $1,905 + ($24,730 - $19,050) x 12% = $2,586.60
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Problem 1-5
The Tax Formula for Individuals, Filing Status and Tax Computation,
The Standard Deduction (LO...
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