Mr. and Mrs. S have the following income items:
Mr. S’s Schedule C net profit | $ | 91,320 | |
Mrs. S’s Schedule C net loss | (7,480 | ) | |
Mrs. S’s taxable pension | 12,300 | ||
Mr. S’s self-employment tax was $12,903. The couple had $13,050 itemized deductions. They provide 100 percent of the financial support of Mr. S’s 82-year-old mother, who resides in their home. Compute the couple’s income tax on a joint return. Assume the taxable year is 2017.
(Round your intermediate calculations and final answers to the nearest whole dollar amount.)
Step 1 )Gross Income
Schedule C Net profit $91320
Schedule C net loss (7480)
Taxable pension 12300
Gross Income $96140
2) Adjusted Gross Income = Gross Income -(1/2* Self employment tax)
= $96140-(12903/2)
=$89688
3) The higher of itemized deduction or standard deduction
Which is $12700 for 2017 for married filing jointly or $13050
Exemption : {($4050*2)+4050*1)}for both married couple and one for dependent relative = $12150
4) Taxable Income
AGI $89688
Less Itemized Deduction (13050)
Less Exemptions (12150)
Taxable Income $64488
5)Tax liability : Using the tax schedule for 2017 for married and filing together
for $64488 which falls in the 15% range of ($18650-75900)
= 15%($64488-$18650) + $1865
= $6875.7+$1865
= $8740.70 or $8741
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