Question

3) Esterina’s salary is $75,000. Her tax withholding is $10,000. She has itemized deductions of $15,000. If Esterina files single for 2020, what is her tax refund or tax amount that is owed to the IRS? Show work.

A. Owe $1,231

B. Owe $2,538

C. Refund of $721

D. Refund of $1,010

Answer 1

Note : Standard deduction and tax bracket of 2020 would be applicable to this given question .

Salary income ( Gross income)	$ 75,000
Less: above the line deduction	nil
Adjusted gross income	$75,000
Less: Itemized deduction ( $ 15,000) or standard deduction ( 12,400) which ever is higher.	$15,000
Net taxable income	$60,000

Calculation for tax owed or tax refund

Range of taxable income	Tax bracket	Tax liability
$ 0 to $ 9,875	10%	$ 987.50
$ 9,876 to $ 40,125	12%	$3,630.00
$ 40,126 to $ 60,000	22%	$4,372.50
	Total tax liability	$ 8,990
	Less: Tax withheld	$ 10,000
	Tax refund	$(1,010)

D) Refund of $ 1,010 is the correct alternative.