Please open the attach named "Tax Assignment" (I did some of it, but im not sure)

and i upload the similar question with solution

1.What is the marginal tax bracket of the Wilsons? ___________%.

2.What is the Wilson's average tax bracket? ___________ % (include two decimal places)

3. If the Wilsons decide to contribute $1540 to First Church instead of $740 how much will their tax liability decrease? $_________ (don't insert $ in answer)

4.How much FICA tax does William pay? $___________ (don't include $ sign in answer) You can round your answer.

SPILKER CHAPTER 4 STUDENT Assignment, Chapter 4 Entire chapter including footnotes, and Chapter 6-34 to 6-40 , Chapter 8 8-1 to 8-6 August 31, 2015 INCOME TAX OVERVIEW, EXEMPTIONS, AND FILING STATUS 1. THE INDIVIDUAL INCOME TAX FORMULA 2. Figure 4.1 textbook: Tax formula a. Income (broadly conceived) b. Less:Exclusions c. d. e. f. g. h. i. j. k. l. $x,xxx (x,xxx) Gross Income Less:Deductions for AGI Adjusted Gross Income (AGI) Less From AGI deductions: i. The greater of1. Total itemized deductions 2. or the standard deduction ii. Personal & dependency exemptions Taxable Income Times tax rates on taxable income Tax before credits i. (see Tax Tables orTax Rate Schedules) Less: Tax credits Less: Prepayments (income i. Taxes withheld, ii. Estimated tax iii. Prepaid taxes) Tax due (or refund) $ x,xxx $x,xxx (x,xxx) $x,xxx (x,xxx) (x,xxx) $x,xxx $x,xxx (x,xxx) (x,xxx) 3. Section 3.1 Tax Formula a. TAX RETURN 1: Fred (age 37) and Susan (age 35) Anderson are married and file a joint income tax return. They have two children, Andy (13) and Shawn (15) who live with them and whom they support. Fred is an accountant at Watkins and Latham, CPA's. Susan is a part-time nursery school teacher. What is the amount of their tax due or tax refund? They have the following income and deductions for 2014. 1 Salaries Fred Susan Contributions to Traditional Individual Retirement Accounts (IRA'S) Fred Susan Home mortgage interest expense paid to B of A (Received 1098) Property taxes on home Purchase of medical insurance Theft of Susan's car on 3/1/2014 Cost $5000 FMV $3000 Susan was uninsured. Interest income from NY City Bonds Social security tax paid Fred 81,000 x 7.65% Susan 19,970 x 7.65% California state income tax withheld in 2014 Fred Susan 81,000 19,970 1,500 500 100,970 2,000 6,500 1,500 10,500 4,000 6,196 1,527 2,800 400 Unreimbursed travel expenses for work Fred Tax return preparation fee Investment expense (management fee charged by Merrill Lynch) Charitable contribution to First Church in cash Federal tax withholding 7,723 3,200 500 2,800 500 700 500 Fred Susan Child tax credit Gifts from Susan's grandmother Money found on street by Fred Sold 100 shares Intel stock on 12/1/2014 for $7000 they purchased on 1/1/2000 for $6000 6,800 2,300 2 9,100 2,000 25,200 30 Solution: Salaries Other Income Long-term capital gain Gross Income Deductions for AGI: IRA contribution AGI 100,970 30 1000 102,000 (2000) 100,000 LESS: Larger of Itemized or Standard Deduction Itemized Deductions: Medical Expenses: Less 10 percent of AGI Deductible medical expenses Interest:Home Mortgage Interest Taxes: California State Income Tax Paid Property taxes on personal residence Charitable contributions Casualty Losses Less $100 per casualty Less 10% of AGI 10,500 10,000 500 6,500 3,200 1,500 3,000 (100) (10000) Miscellaneous Itemized Deductions: Unreimbursed employee expenses Tax return preparation fee Investment Expenses 4,700 500 0 2800 500 700 4000 Less 2% of AGI 2,000 Total itemized deductions Vs Standard Deduction Greater of itemized or standard deduction Less Exemptions: Personal exemptions 2 x 3950 Dependency exemptions 2 x $3950 Taxable Income 14,200 7900 7900 Total federal tax for 2014 Ordinary Income LTCG Total Tax Less Tax Credits Child Tax Credit 69000 1000 70000 (14,200) (15,800) 70,000 9443 *0 0 9443 (2000) 7,443 (9100) 1657 Less federal tax payments Tax refund 3 a. QUESTION 1: Figure out the tax due from the tax rate schedules. a. Answer: Tax on Ordinary Income 9443 Tax on LTCG 0 Total 9443 b. QUESTION 2: What is the marginal tax bracket of the Andersons? 1570 c. QUESTION 3: a. True or False: The Andersons pay 15% of their taxable income in federal tax? b. What is the average tax rate of the Andersons? i. Definition: Total tax liability taxable income= 7443/70,000=10.67 d. QUESTION 4: What is the effective tax rate of the Andersons? 7443/ (70,000+4000) a. Definition: Total tax liability Total Income 7440/106,000 i. Total Income = Taxable income + Excludible income 10200+4000 b. Answer:Economic income = 70,000+ 4,000 (tax-exempt interest) e. QUESTION 5: If instead of $500, the Andersons contributed $3500 to their Church, how much federal income tax would they save by the increased $3000 contribution? 3000*15%=450 (Deduction X marginal) f. QUESTION 7:If the home mortgage interest expense were $2,500 instead of $6,500 would the Andersons itemize their deductions or take the standard deduction. 4 a. TAX RETURN 1: William (age 42) and Claire (age 53) Wilson are married and file a joint income tax return. They have three children, Sharon (15) and Kim (12) Peter (3) who live with them and whom they support. William is a manager at Subway, Inc. Claire is a part-time cashier at Costco. They live at 1310 Walnut Lane, Salinas, Ca. 94113. They both wish to contribute $3 to the Presidential Election Campaign. What is the amount of their tax due or tax refund? They have the following income and deductions for 2014. (You can make up social security numbers). Salaries William Claire Contributions to Traditional Individual Retirement Accounts (IRA'S) William Claire Home mortgage interest expense paid to B of A (Received 1098) Property taxes on home Purchase of medical insurance Theft of Claire's car on 3/1/2014 Cost $30,000 FMV $13,350 Claire was uninsured. Interest income from Houston City Bonds Social security tax paid William 63,150 x 7.65% Claire 35,200 x 7.65% California state income tax withheld in 2014 William Claire Unreimbursed travel expenses for work William Tax return preparation fee Investment expense (management fee charged by Merrill Lynch) Charitable contribution to First Church in cash Federal tax withholding William Claire Child tax credit Gifts from Claire's grandmother Money found on street by William Sold 280 shares XYZstock on 3/11/2014 for $16,500 they purchased on 11/13/2004 for $14,200 63,150 35,200 98,350 3,300 1,150 4450 5800 3,900 10,300 7,000 4831 2693 7524 2920 530 3450 1700 450 980 450 740 2,729 1,015 3744 4,310 880 Answer: Salaries Other Income Long-term capital gain Gross Income Deductions for AGI: IRA contribution AGI LESS: Larger of Itemized or Standard Deduction Itemized Deductions: Medical Expenses: Less 10 percent of AGI Deductible medical expenses Interest:Home Mortgage Interest Taxes: California State Income Tax Paid Property taxes on personal residence Charitable contributions Casualty Losses Less $100 per casualty Less 10% of AGI Miscellaneous Itemized Deductions: Unreimbursed employee expenses Tax return preparation fee Investment Expenses 98350 880 2300 101530 (16,650) 84880 10,300 8488 ? 5800 3450 3,900 740 ? (100) (8488) 0 1700 450 980 3130 Less 2% of AGI 1698 Total itemized deductions Vs Standard Deduction Greater of itemized or standard deduction Less Exemptions: Personal exemptions 2 x 3950 Dependency exemptions 2 x $3950 Taxable Income Total federal tax for 2014 Ordinary Income LTCG Total Tax Less Tax Credits Child Tax Credit 7350 1 Less federal tax payments Tax refund spi62368_backendsheet.indd Page 1 27/01/14 8:06 PM user-f-w-198 /202/MH02128/spi62368_disk1of1/0077862368/spi62368_pagefiles 2014 Federal Tax Rate Schedule Basic Standard Deduction Amounts Filing Status Schedule XSingle If taxable income is over: $ 0 $ 9,075 $ 36,900 $ 89,350 $186,350 $405,100 $406,750 But not over: If taxable income is over: The tax is: $ 9,075 10% of taxable income $ 36,900 $907.50 plus 15% of the excess over $9,075 $ 89,350 $5,081.25 plus 25% of the excess over $36,900 $186,350 $18,193.75 plus 28% of the excess over $89,350 $405,100 $45,353.75 plus 33% of the excess over $186,350 $406,750 $117,541.25 plus 35% of the excess over $405,100 $118,118.75 plus 39.6% of the excess over $406,750 But not over: The tax is: $ 0 $ 12,950 $ 49,400 $127,550 $206,600 $405,100 $432,200 $ 12,950 $ 49,400 $127,550 $206,600 $405,100 $432,200 10% of taxable income $1,295.00 plus 15% of the excess over $12,950 $6,762.50 plus 25% of the excess over $49,400 $26,300.00 plus 28% of the excess over $127,550 $48,434.00 plus 33% of the excess over $206,600 $113,939.00 plus 35% of the excess over $405,100 $123,424.00 plus 39.6% of the excess over $432,200 Schedule Y-1Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: $ 0 $ 18,150 $ 73,800 $148,850 $226,850 $405,100 $457,600 $ 18,150 $ 73,800 $148,850 $226,850 $405,100 $457,600 2013 Deduction 2014 Deduction Married filing jointly Qualifying widow or widower Married filing separately Head of household Single $12,200 $12,200 $ 6,100 $ 8,950 $ 6,100 $12,400 $12,400 $ 6,200 $ 9,100 $ 6,200 Schedule ZHead of Household 10% of taxable income $1,815.00 plus 15% of the excess over $18,150 $10,162.50 plus 25% of the excess over $73,800 $28,925.00 plus 28% of the excess over $148,850 $50,765.00 plus 33% of the excess over $226,850 $109,587 plus 35% of the excess over $405,100 .50 $127,962.50 plus 39.6% of the excess over $457,600 2013 Deduction 2014 Deduction Married taxpayers 65 or over or blind $1,200 $1,200 Single taxpayer or head of household who is 65 or over or blind $1,500 $1,550 Schedule Y-2Married Filing Separately If taxable income is over: The tax is: Amount of Each Additional Standard Deduction But not over: $ 0 $ 9,075 $ 36,900 $ 74,425 $113,425 $202,550 $228,800 $ 9,075 $ 36,900 $ 74,425 $113,425 $202,550 $228,800 The tax is: 10% of taxable income $907.50 plus 15% of the excess over $9,075 $5,081.25 plus 25% of the excess over $36,900 $14,462.50 plus 28% of the excess over $74,425 $25,382.50 plus 33% of the excess over $113,425 $54,793.75 plus 35% of the excess over $202,550 $63,981.25 plus 39.6% of the excess over $228,800 Personal and Dependency Exemption 2013 Exemption 2014 Exemption $3,900 $3,950 2013 Federal Tax Rate Schedule Schedule XSingle Corporate Income Tax Rates Schedule ZHead of Household Taxable Income If taxable income is over: But not over: $ 0 $ 8,925 $ 36,250 $ 87,850 $183,250 $398,350 $400,000 $ 8,925 $ 36,250 $ 87,850 $183,250 $398,350 $400,000 The tax is: 10% of taxable income $892.50 plus 15% of the excess over $8,925 $4,991.25 plus 25% of the excess over $36,250 $17,891.25 plus 28% of the excess over $87,850 $44,603.25 plus 33% of the excess over $183,250 $115,586.25 plus 35% of the excess over $398,350 $116,163.75 plus 39.6% of the excess over $400,000 If taxable income is over: But not over: The tax is: $ 0 $ 12,750 $ 48,600 $125,450 $203,150 $398,350 $425,000 $ 12,750 $ 48,600 $125,450 $203,150 $398,350 $425,000 10% of taxable income $1,275.00 plus 15% of the excess over $12,750 $6,652.50 plus 25% of the excess over $48,600 $25,865.00 plus 28% of the excess over $125,450 $47,621.00 plus 33% of the excess over $203,150 $112,037 plus 35% of the excess over $398,350 .00 $121,364.50 plus 39.6% of the excess over $425,000 Schedule Y-1Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: $ 0 $ 17,850 $ 72,500 $146,400 $223,050 $398,350 $450,000 $ 17,850 $ 72,500 $146,400 $223,050 $398,350 $450,000 The tax is: 10% of taxable income $1,785.00 plus 15% of the excess over $17,850 $9,982.50 plus 25% of the excess over $72,500 $28,457 plus 28% of the excess over $146,400 .50 $49,919.50 plus 33% of the excess over $223,050 $107,768.50 plus 35% of the excess over $398,350 $125,846.00 plus 39.6% of the excess over $450,000 ISBN: 0077862368 Author: Brian C. Spilker, Benjamin C. Ayers Schedule Y-2Married Filing Separately If taxable income is over: $ 0 $ 8,925 $ 36,250 $ 73,200 $111,525 $199,175 $225,000 Title: Taxation of Individuals and Business Entities Back endsheets But not over: The tax is: $ 8,925 10% of taxable income $ 36,250 $892.50 plus 15% of the excess over $8,925 $ 73,200 $4,991.25 plus 25% of the excess over $36,250 $111,525 $14,228.75 plus 28% of the excess over $73,200 $199,175 $24,959.75 plus 33% of the excess over $111,525 $225,000 $53,884.25 plus 35% of the excess over $199,175 $62,923.00 plus 39.6% of the excess over $225,000 Color: 4 Pages: 6,7 Tax , $50,000 $50,000-$75,000 $75,000-$100,000 $100,000-$335,000 $335,000-$10,000,000 $10,000,000-$15,000,000 $15,000,000-$18,333,333 Over $18,333,333 15% of the taxable income $7,500 1 25% of taxable income over $50,000 $13,750 1 34% of taxable income over $75,000 $22,250 1 39% of taxable income over $100,000 $113,900 1 34% of taxable income over $335,000 $3,400,000 1 35% of taxable income over $10,000,000 $5,150,000 1 38% of taxable income over $15,000,000 35% of the taxable income