Question
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 $2,550, and also opened up an IRA, to which she contributed $300 last year. Her savings accounts earn 2% interest per year, and she also had received an unexpected $1,000 gift from her great aunt. Jamie was also lucky enough last year to win a raffle prize of $2,000, most of which was deposited in to her regular savings account after paying off her credit card balance.
Current Financial Situation:
Assets:
Checking account: $2,250
Savings Account: $6,900 (Interest earned last year: $125)
Emergency Fund savings account: $3,900 (Interest earned last year: $75)
IRA balance: $350 ($300 contribution made last year)
Car: $3,000
Liabilities:
Student loan: $10,800
Credit card balance: $0 (Interest paid last year: $55)
Income:
Gross monthly salary: $2,550
Monthly Expenses:
Rent obligation: $275
Utilities obligation: $135
Food: $130
Gas/Maintenance: $110
Credit Card Payment: $0
Savings:
Regular Savings monthly deposit: $175
Rainy Day Savings monthly deposit: $25
Entertainment:
Cake decorating class: $40
Movies with friends: $60
- What impact on Jamie Lees income would the gift of $1,000 from her great aunt have on her adjusted gross income? Would there be an impact on the adjusted gross income with her $2,000 raffle prize winnings? Explain your answer.
Answer:
- Using Exhibit 3-1 (page 98) as a guide, calculate Jamie Lees Adjusted Gross Income amount by completing the table below:
Gross Income: Gross Salary: ($2,550 * 12 months): $30,600 + Interest on Savings: ($125 + $75) =$200 + Raffle prize winnings: $2,000 |
|
(-) Adjustments to Income: IRA Contribution |
|
= Adjusted Gross Income |
|
- What would Jamie Lees filing status be considered?
Answer:
- Jamie Lee has a marginal tax rate of 15% and an average tax rate of 11%. Explain why there is a difference between the two rates.
Answer:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started