Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jamie Lee Jackson, age 26, is in her last semester of college and is waiting for graduation day that is just around the corner! It

Jamie Lee Jackson, age 26, is in her last semester of college and is waiting for graduation day that is just around the corner! It is the time of year again when Jamie Lee must file her annual federal income taxes. Last year, she received an increase in salary from the bakery, which brought her gross monthly earnings to $3,200, and also opened up an IRA, to which she contributed $250 last year. Her savings accounts earn 2% interest per year, and she also had received an unexpected $2,150 gift from her great aunt. Jamie was also lucky enough last year to win a raffle prize of $3,300, most of which was deposited into her regular savings account after paying off her credit card balance.

Estimate Jamie Lee's current tax liability by completing the form below. Use the 2016 values for standard deduction ($6,300) and personal exemption ($4,050). Each answer must have a value for the assignment to be complete. Enter "0" for any unused categories.

Current Financial Situation

Assets: Monthly Expenses:
Checking account $2,950 Rent obligation $340
Savings account $8,200 Utilities $200
(Interest earned last year) $190 Food $195
Emergency fund savings account $5,200 Gas/maintenance $175
(Interest earned last year) $75 Credit card payment $0
IRA balance $480 Savings allocation:
(Contribution made last year) $250 Regular savings (monthly) $165
Car $4,300 Rainy day savings (monthly) $55
Liabilities: Entertainment:
Student loan $12,100 Cake decorating class $40
Credit card balance $0 Movies with friends $60
(Interest paid last year) $60
Income:
Gross monthly salary $3,200

image text in transcribed

image text in transcribed

2016 Federal Income Tax Brackets SINGLE INCOME RANGE TAX $0 - $9,275 10% $9,276 - $37,650 15% $37,651 - $91,150 25% $91,151 - $190,150 28% $190,151 - $413,350 33% $413,351 - $415,050 35% $415,051+ 39.6% MARRIED, FILING JOINTLY INCOME RANGE TAX $0-$18,550 10% $18,551 - $75,300 15% $75,301 - $ 151,900 25% $151,901 - $231,450 28% $231,451 - $413,350 33% $413,351 - $466,950 35% $466,951+ 39.6% HEAD OF HOUSEHOLD INCOME RANGE TAX $0 - $13,250 10% $13,251 - $50,400 15% $50,401 - $130,150 25% $130,151 - $210,800 28% $210,801 - $413,350 33% $413,351 - $441,000 35% $441,001+ 39.6% Source: Internal Revenue Service, "Revenue Procedures 2015-53." Estimated Income Tax Gross income (wages, salary, investment income, and other ordinary income) Less adjustments to income (see current tax regulations) Equals adjusted gross income Less standard deduction (use 2016 amounts) $ $ 0 6,300 Itemized deductions (whichever total is larger) Medical expenses (exceeding 10% of AGI) State/local income and property taxes Mortgage, home equity loan interest Contributions Casualty and theft losses Moving, job-related, and miscellaneaous expenses (exceeding 2% of AGI) Total itemized deductions Larger of standard or itemized deductions Less personal exemptions Equals taxable income $ $ $ $ 0 6,300 4,050 (10,350) Estimated tax (based on 2016 tax tables) Less tax credits Plus other taxes Equals total tax liability Less estimated withholding and payments Equals tax due (or refund) $ 0 $ 0 2016 Federal Income Tax Brackets SINGLE INCOME RANGE TAX $0 - $9,275 10% $9,276 - $37,650 15% $37,651 - $91,150 25% $91,151 - $190,150 28% $190,151 - $413,350 33% $413,351 - $415,050 35% $415,051+ 39.6% MARRIED, FILING JOINTLY INCOME RANGE TAX $0-$18,550 10% $18,551 - $75,300 15% $75,301 - $ 151,900 25% $151,901 - $231,450 28% $231,451 - $413,350 33% $413,351 - $466,950 35% $466,951+ 39.6% HEAD OF HOUSEHOLD INCOME RANGE TAX $0 - $13,250 10% $13,251 - $50,400 15% $50,401 - $130,150 25% $130,151 - $210,800 28% $210,801 - $413,350 33% $413,351 - $441,000 35% $441,001+ 39.6% Source: Internal Revenue Service, "Revenue Procedures 2015-53." Estimated Income Tax Gross income (wages, salary, investment income, and other ordinary income) Less adjustments to income (see current tax regulations) Equals adjusted gross income Less standard deduction (use 2016 amounts) $ $ 0 6,300 Itemized deductions (whichever total is larger) Medical expenses (exceeding 10% of AGI) State/local income and property taxes Mortgage, home equity loan interest Contributions Casualty and theft losses Moving, job-related, and miscellaneaous expenses (exceeding 2% of AGI) Total itemized deductions Larger of standard or itemized deductions Less personal exemptions Equals taxable income $ $ $ $ 0 6,300 4,050 (10,350) Estimated tax (based on 2016 tax tables) Less tax credits Plus other taxes Equals total tax liability Less estimated withholding and payments Equals tax due (or refund) $ 0 $ 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Focus On Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes

2nd Edition

0073530638, 9780073530635

More Books

Students also viewed these Finance questions

Question

Alcohol and drug use among student athletes

Answered: 1 week ago