Question

Maria, a single tax-payer, earns wages of $45,500, received $925 in interest from a savings account,...

Maria, a single tax-payer, earns wages of $45,500, received $925 in interest from a savings account, and contributed $1,150 to a tax-deferred savings plan. She was entitled to a personal exemption of $3,800 and had itemized deductions totaling $5,450.

Compute

a) her gross income

b) adjusted gross income

c) taxable income

d) set up but do not solve for her income tax. you can assume she had no tax credits this year

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Homework Answers

Answer #1

a) Calculation of Gross Income:

Wages = $45,500

Saving Interest = $925

Total = 46425$ is Gross Income

b) Calculation of Adjusted Gross Income= Gross total Income - contribution in tax saving plan

= $46425 - $1150= $45275

c) Calculation of Taxable Income = Adjusted Gross Income - Deductions

= $ 45275 - $5450 = $39825

d) Calculation of Tax Liability:

UPTO $9700 tax rate is 10%

$9701 to $39475 tax rate is 12%

$39476 to $ 84200 tax rate is 22%

Tax liability of Maria is = (9700$*10%) + (($39475-$9700)*12%)+ (($39825-$39475)*22%)

= 970+3573+77=4620$

As MAria has no tax credits, her tax liability is $ 4620.

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