Jeremy earned $160,000 in salary and $9,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $15,500 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the tax rate schedules.). (Do not round intermediate calculations. Round "Income tax liability" to 2 decimal places.)

In 2015, taxpayers are allowed to deduct $4,000 for each personal and dependency exemption they are entitled to claim.

For 2015, Basic standard deduction for Head of Household is $9,250

a.

Use the 2015 tax rate schedules to determine Jeremy?s taxes due.

b.

Assume that in addition to the original facts, Jeremy has a long-term capital gain of $7,500. What is Jeremy?s tax liability including the tax on the capital gain?

c.	Assume the original facts except that Jeremy had only $8,000 in itemized deductions. What is Jeremy?s total income tax liability?

Given Information: Salary = Interest Income = No. Of Qualifying Children = Itemized Deductions = Filing As = No. of child qualifies for child tax credit = Personal & Dependency Exemptions = Standard Deduction Head of Household = $160,000 $9,000 2 $15,500 Head of Household 0 $4,000 $9,250 Note: All the calculations performed below used the tax rates and other rates/values and details pertaining to 2015 Federal Taxation Rates and slabs. Final Answers (Detailed Calculations are shown Below) a) Use the 2015 tax rate schedules to determine Jeremy's taxes due. Answer: Jeremy will owe = $30,054.50 b ) Assume that in addition to the original facts, Jeremy has a long-term capital gain of $7,500. What is Jeremy's tax liability including the tax on the capital gain? Answer: Jeremy will owe = $31,179.50 c) Assume the original facts except that Jeremy had only $8,000 in itemized deductions. What is Jeremy's total income tax liability? Answer: Jeremy will owe = $31,804.50 a) Use the 2015 tax rate schedules to determine Jeremy's taxes due. Answer: Description (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) Greater of standard deductions or itemized deductions (7) Personal and dependency exemptions (8) Taxable income Income tax liability b) Amount 169,000 0 $169,000 9,250 15,500 15,500 12,000 $141,500 $30,054.50 Computation $160,000 salary + $9,000 interest income (1) - (2) Head of household (5) > (4) 4,000 3 (personal exemption and two dependency exemptions) (3) - (6)- (7) (141,500 - 129,600) 28% + $26,722.50 (see tax rate schedule for head of household) Assume that in addition to the original facts, Jeremy has a long-term capital gain of $7,500. What is Jeremy's tax liability including the tax on the capital gain? Answer: Long Term Capital Gain = Description (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) Greater of standard deductions or itemized deductions (7) Personal and dependency exemptions (8) Taxable income $7,500 Amount 176,500 0 $176,500 9,250 15,500 15,500 12,000 $149,000 Computation $160,000 salary + $9,000 interest income + 7,500 long-term capital gains (1) - (2) Head of household (5) > (4) 4,000 3 (personal exemption and two dependency exemptions) (3) - (6) - (7) *Income tax liability $31,179.50 (141,500 - 129,600) 28% + $26,722.50 + 7,500 15% (See tax rate schedule for head of household. If 28% tax bracket long term capital gains are taxed at 15%. *Note: In the above calculations we have taken the taxable income amount from Part a) and the long-term capital gains are computed seperately at the rate of 15%. https://www.fool.com/how-to-invest/personal-finance/taxes/2015/08/16/long-term-capital-gains-taxrates-in-2015.aspx c) Assume the original facts except that Jeremy had only $8,000 in itemized deductions. What is Jeremy's Answer: total income tax liability? Itemized Deduction = Description (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) Greater of standard deductions or itemized deductions (7) Personal and dependency exemptions $8,000 Amount 169,000 0 $169,000 9,250 8,000 9,250 12,000 Computation $160,000 salary + $9,000 interest income (1) - (2) Head of household (4) > (5) 4,000 3 (personal exemption and two dependency exemptions) (8) Taxable income Income tax liability $147,750 $31,804.50 (3) - (6) - (7) (147,750 - 129,600) 28% + $26,722.50 (see tax rate schedule for head of household) \fGiven Information: Salary = Interest Income = No. Of Qualifying Children = Itemized Deductions = Filing As = No. of child qualifies for child tax credit = Personal & Dependency Exemptions = Standard Deduction Head of Household = $160,000 $9,000 2 $15,500 Head of Household 0 $4,000 $9,250 Note: All the calculations performed below used the tax rates and other rates/values and details pertaining to 2015 Federal Taxation Rates and slabs. Final Answers (Detailed Calculations are shown Below) a) Use the 2015 tax rate schedules to determine Jeremy's taxes due. Answer: Jeremy will owe = $30,054.50 b ) Assume that in addition to the original facts, Jeremy has a long-term capital gain of $7,500. What is Jeremy's tax liability including the tax on the capital gain? Answer: Jeremy will owe = $31,179.50 c) Assume the original facts except that Jeremy had only $8,000 in itemized deductions. What is Jeremy's total income tax liability? Answer: Jeremy will owe = $31,804.50 a) Use the 2015 tax rate schedules to determine Jeremy's taxes due. Answer: Description (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) Greater of standard deductions or itemized deductions (7) Personal and dependency exemptions (8) Taxable income Income tax liability b) Amount 169,000 0 $169,000 9,250 15,500 15,500 12,000 $141,500 $30,054.50 Computation $160,000 salary + $9,000 interest income (1) - (2) Head of household (5) > (4) 4,000 3 (personal exemption and two dependency exemptions) (3) - (6)- (7) (141,500 - 129,600) 28% + $26,722.50 (see tax rate schedule for head of household) Assume that in addition to the original facts, Jeremy has a long-term capital gain of $7,500. What is Jeremy's tax liability including the tax on the capital gain? Answer: Long Term Capital Gain = Description (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) Greater of standard deductions or itemized deductions (7) Personal and dependency exemptions (8) Taxable income $7,500 Amount 176,500 0 $176,500 9,250 15,500 15,500 12,000 $149,000 Computation $160,000 salary + $9,000 interest income + 7,500 long-term capital gains (1) - (2) Head of household (5) > (4) 4,000 3 (personal exemption and two dependency exemptions) (3) - (6) - (7) *Income tax liability $31,179.50 (141,500 - 129,600) 28% + $26,722.50 + 7,500 15% (See tax rate schedule for head of household. If 28% tax bracket long term capital gains are taxed at 15%. *Note: In the above calculations we have taken the taxable income amount from Part a) and the long-term capital gains are computed seperately at the rate of 15%. https://www.fool.com/how-to-invest/personal-finance/taxes/2015/08/16/long-term-capital-gains-taxrates-in-2015.aspx c) Assume the original facts except that Jeremy had only $8,000 in itemized deductions. What is Jeremy's Answer: total income tax liability? Itemized Deduction = Description (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) Greater of standard deductions or itemized deductions (7) Personal and dependency exemptions $8,000 Amount 169,000 0 $169,000 9,250 8,000 9,250 12,000 Computation $160,000 salary + $9,000 interest income (1) - (2) Head of household (4) > (5) 4,000 3 (personal exemption and two dependency exemptions) (8) Taxable income Income tax liability $147,750 $31,804.50 (3) - (6) - (7) (147,750 - 129,600) 28% + $26,722.50 (see tax rate schedule for head of household)