Question

The Millers, a family of four filing a joint return, have the following information to prepare their 2017 federal income taxes.

Wages and salaries: $100,000

Interest income 3,000 ($1,000 in tax-exempt municipal bonds)

State and local income taxes 5,500

Property taxes 4,800

General sales taxes 2,450

Home mortgage interest 11,500

Medical expenses 5,000 (not reimbursed)

Cash charitable contribution 450

For the Millers, calculate the following:

1) Adjusted Gross Income (AGI)
2) Taxable Income
3) Tax
4) Effective tax rate

Answer 1

Married Filing Jointly (Family) Tax rates:

Marginal Tax Rate	Taxable Income
10%	$0 - $18,650
15%	$18,651 - $75,900
25%	$75,901 - 153,100
28%	$153,101 - $233,350
33%	$233,351 - $416,700
35%	$416,701 - $470,700
39.6%	$470,701 or more

1 ) Calculation of Adjusted Gross total income :

Wages and salaries -  $100,000

Interest income - $ 2,000 (Because $1,000 in tax-exempt municipal bonds)

Total Income - $ 1,02,000

( - ) Home mortgage interest - $ 11,500

( - ) Medical expenses - $ 5,000 ( Because not reiumbursed)

Gross total income - $ 85,500

2 ) Calculation of taxable income :

Gross total income - $ 85,500

( -) State and local income taxes - $ 5,500

( - ) Property taxes - $ 4,800

( - ) General sales taxes - $ 2,450

( -) Cash charitable contribution - $ 450

Taxable income - $ 72,300

3 ) Effective tax rate - 15 %

4) Calculation of Tax :

$ 72,300 * 15 %

= $ 10,845