Question

Sophia Johnson is 24 years old and single, lives in an apartment, and has no dependents. Last year she earned $43,700 as a sales assistant for Office Furniture Rentals; $3,933 of her wages was withheld for federal income taxes. In addition, she had interest income of $85. The standard deduction in 2014 was $6,200 for single. The exemption was claimed to be worth $3,950. The appropriate tax rate schedule is shown below:

XHIBIT 3.3    Sample Tax Rate Schedules

Tax rates levied on personal income vary with the amount of reported taxable income and the taxpayer's filing status.

2014 Tax Rate Schedules

Schedule X-If your filing status is Single

If your taxable income is:		The tax is:
Over-	But not over-		of the amount over-
0	$9,075	_ _ _ _ _10%	$0
9,075	36,900	$907.50 + 15%	9,075
36,900	89,350	5,081.25 + 25%	36,900
89,350	186,350	18,193.75 + 28%	89,350
186,350	405,100	45,353.75 + 33%	186,350
405,100	406,750	117,541.25 + 35%	405,100
406,750	_ _ _ _ _	118,118.75 + 39.6%	406,750

a. Estimate her taxable income.
$

B.) Estimate her tax liability. Round the answer to the nearest cent. Use unrounded values in later calculations. (Hint: Use the tax rate schedules given in Exhibit 3.3 to determine her tax liability.) $

c.) Estimate her tax refund or tax owed. Enter tax owed, if any, as negative amount. Round the answer to the nearest cent.
$   

Answer 1

a)	Calculation of total income of Sophia Johnson
	Income from salary	$43,700.00
	Other Income
	interest income	$85.00
Less:	Exempted income	$3,950.00
	Total Income	$39,835.00
Less:	Standard Deduction	$6,200.00
	Taxable income	$33,635.00
b)	Calculation of tax liability of Sophia Johnson
	Taxable Income	$33,635.00
	Tax on $33635	$8,765.25
c)	Calculation of tax liability  or refund of Sophia Johnson
	Tax Liability	$8,765.25
Less:	withheld for federal income taxes	$3,933.00
	Net tax Laibility	$4,832.25