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(Solved) Chapter 4 Individual Income Tax Overview PROBLEM SOLUTIONS 26. [L0 1] Jeremy earned $100,000 in salary and $6,000 in interest income during the year....


Chapter 4 Individual Income Tax Overview PROBLEM SOLUTIONS 26. [L0 1] Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $17,000 in itemized deductions. Neither of his dependents qualifies for the child tax credit. a. Use the 2012 tax rate schedules to determine Jeremy’s taxes due. Jeremy will owe $14,045 calculated as follows: Description Amount Computation (1) Gross income 106,000 $100,000 salary + $6,000 interest income (2) For AGI deductions 0 (3) Adjusted gross income $106,000 (1) — (2) (4) Standard deduction 8,700 Head of household (5) Itemized deductions 17,000 (6) Greater of standard deductions or 17,000 (5) > (4) itemized deductions (7) Personal and dependency 11,400 3,800 X 3 (personal exemptions exemption and two dependency exemptions) (8) Taxable income $77,600 (3) - (6)- (7) Income tax liability $14,045 (77,600 — 47,350) X 25% + $6,482.50 (see tax rate schedule for head of household) b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $4,000. What is Jeremy’s tax liability including the tax on the capital gain (use the tax rate schedules rather than the tax tables)? Jeremy will owe $14,645 calculated as follows:
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Where is the how to calculations and the 2012 tax rate sheet so I can figure it out on my own? Thank you!
This question was created from Ch. 4 Problem Solutions https://www.coursehero.com/file/7691078/Ch-4-Problem-Solutions/?focusQaId=10264685

 


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