Question
Linette,a single taxpayer, had the following income and deductions for the tax year 2018 INCOME: Salary $95,000 Business Income 28,000 Interest income from taxable bonds
Linette,a single taxpayer, had the following income and deductions for the tax year 2018
INCOME: | Salary | $95,000 | |
Business Income | 28,000 | ||
Interest income from taxable bonds | 5,000 | ||
Tax-exempt bond interest | 3,500 | ||
TOTAL INCOME | 131,500 | ||
DEDUCTIONS: | Business expenses | $7,000 | |
Itemized deductions | 15,000 | ||
TOTAL DEDUCTIONS | 22,000 |
|
Filing Status | |||||||||||
Married individuals filing joint returns and surviving spouses | $24,000 | ||||||||||
Heads of households | $18,000 | ||||||||||
Unmarried individuals (other than surviving spouses and heads of households) | $12,000 | ||||||||||
Married individuals filing separate returns | $12,000 | ||||||||||
Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses | $1,300* | * | |||||||||
Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse | $1,600* | * | |||||||||
Taxpayer claimed as dependent on another taxpayers return: Greater of (1) earned income plus $350 or (2) $1,050. | |||||||||||
* These amounts are $2,600 and $3,200, respectively, for a taxpayer who is both aged and blind. |
|
.
If taxable income is: | The tax is: | |||||
Not over $9,525 | 10% of taxable income. | |||||
Over $9,525 but not over $38,700 | $952.50 + 12% of the excess over $9,525. | |||||
Over $38,700 but not over $82,500 | $4,453.50 + 22% of the excess over $38,700. | |||||
Over $82,500 but not over $157,500 | $14,089.50 + 24% of the excess over $82,500. | |||||
Over $157,500 but not over $200,000 | $32,089.50 + 32% of the excess over $157,500. | |||||
Over $200,000 but not over $500,000 | $45,689.50 + 35% of the excess over $200,000. | |||||
Over $500,000 | $150,689.50 + 37% of the excess over $500,000. |
Requirement a. Compute Linette's taxable income and federal tax liability for 2018.
First calculate the gross income, then calculate taxable income and the federal tax liability. (Calculate the tax using the tax rate schedule. Do not round interim tax calculations. Round the amount entered into the cell to the nearest whole dollar. If an input field is not used in the table, leave the input field empty; do not select a label or enter a zero.)
|
| |
|
| |
|
| |
|
| |
Total income from whatever source derived | ||
Minus: | Exclusions, as provided in the tax law |
|
|
| |
Gross income |
|
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