Question

Another tax return calculation YAAAYYYYYY! Due 4/30/2019 Help Kamal prepare his 2018 tax return. He calculated his Adjusted Gross Income to be $95,600. He hopes to lower his tax bill though, because he has several significant itemized deductions: he paid $7,000 of mortgage interest, and donated $6,000 to charity. Kamal paid $13,000 through his employers pay check withholding in federal income taxes over the course of the year. Does Kamal owe more taxes, or should he expect a tax refund? How much? a. b. What is his marginal tax bracket? What is his average tax rate?

personal finance class! how to calculate taxes in this case?

Answer 1

a. Adjusted Gross Income (AGI)		$95,600
Less: Itemized deductions
Mortgage Interest	$7,000
Charity	$6,000
		$13,000
Taxable income		$82,600
Total Tax		$14,114
Federal income tax withheld (Tax paid)		$13,000
Kamal owes		$1,114

b. Marginal Tax Bracket for Kamal = 24%

Marginal Tax rate	Taxable Income	Tax
10%	upto $9,525	$              953
12%	$9,526 to $38,700	$          3,501
22%	$38,701 to $82,500	$          9,636
24%	$82,501 to $157,500	$                24
	Total	$        14,114

Average Tax rate = Total tax/ Taxable Income x 100%

= 14114/ 82600 x 100% = 17.09%

Note: It is assumed that

1.Charitable donation is made to qualified organisation.

2. Filing status of Kamal is Single.