Question

Marc and Michelle are married and earned salaries this year of $69,600 and $14,100, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $1,200 from corporate bonds. Marc contributed $3,200 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $2,200. Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $7,400 of expenditures that qualify as itemized deductions and they had a total of $6,340 in federal income taxes withheld from their paychecks during the course of the year

a. What is Marc and Michelle’s gross income?

    

b. What is Marc and Michelle’s adjusted gross income?

    

c. What is the total amount of Marc and Michelle’s deductions from AGI?

    

d. What is Marc and Michelle’s taxable income?

    

e. What is Marc and Michelle’s taxes payable or refund due for the year?

    

Answer 1

Item	Amount
Marc's Income (A)	$69,600
Michelle's income (B)	$14,100
Interest income from muncipal and corp bonds (C)	$1,550
Gross Income (D=A+B+C)	$85,250
Contribution for retirement account (E)	$3,200
Alimony payment (F)	$2,200
Adjusted Gross Income (G=D-E-F)	$79,850
Child tax credit (H)	$2,000
Itemized deductions (I)	$7,400
Total Deductions from AGI (J=H+I)	$9,400
Taxable Income (K=G-J)	$70,450
Total tax (L=(K-19050)*12%+19050*10%)	$8,073
Taxes withheld	$6,340
Taxes payable	$1,733