Question

# Tax Formula Quiz 3 Salary \$                     100,000.00 Corporate Bonds \$         &nb

 Tax Formula Quiz 3 Salary \$                     100,000.00 Corporate Bonds \$                         5,000.00 Muni Bonds \$                       10,000.00 Ordinary Dividends \$                         8,000.00 Qualified Dividends \$                         5,000.00 ST Capital Loss \$                         2,000.00 LT Capital Gain \$                         8,000.00 For AGI Deductions \$                         6,000.00 Itemized Deductions \$                         8,000.00 Filing Status S Dependents 0 Withholding \$                         6,000.00 Non-Refundable Credits \$                         2,000.00 Calculate: 2019 Gross Income Adjusted Gross Income Taxable Income Income Tax Liability Tax Due/(Refund) Blank 1 Gross Income Blank 2 Adjusted Gross Income Blank 3 Taxable Income Blank 4 Income Tax Liability Blank 5 Tax Due/(Refund) Sample Answer: \$                         5,000.00 \$                        (5,000.00)

Need to find:

1) Gross income

2) AGI

3) Taxable income

4) Income tax liab

5) Amount Due (refund)

Calculation of Tax Due /(Refund) for the year 2019:-

Salary \$ 100000

Corporate Bonds (assuming Interest income) \$ 5000

Muni Bonds NIL

(Interest from Muni Bonds are Tax Free at federal, state & local levels

as long as the investor reside in the same state or municipality

as the issuer)

Ordinary Dividends \$ 8000

Qualified Dividends NIL

(To be treated seperately)

ST Capital Loss \$(2000)

LT Capital Gain NIL

(To be treated seperately)

Gross Income     \$ 111,000

Less: Adjustments to Income (AGI Deductions)   \$ 6,000

Less:- Higher of

(a) Itemized Deductions (as given) \$ 8000

OR

(b) Standard Deductions \$ 12200 \$ 12200

Taxable Income \$ 92800

Tax Thereon (See Below) \$ 16446.50

LT Capital gain \$ 1200.00

(8000* 15%, since the tax payer falls in 24% tax bracket)

Qualified Dividends \$ 750.00

(5000* 15% since taxpayer falls in 24% tax bracket)

Total Tax \$ 18,396.50

Less:- Withheld Tax \$ 6,000.00

Less:- Non-refundable credit \$ 2,000.00

Tax Payable \$ 10,396.50

Tax Amount :-

0 to 9700 @ 10% 970.00

9700 to 39475 @ 12% 3573.00

39475 to 84200 @ 22% 9839.00

84200 to 92800 @ 24% 2064.00

16,446.50