Question

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)

Answer 1

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

Adjusted Gross Income $ 105,000

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