Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information Skip to question [The following information applies to the questions displayed below.] John and Sandy Ferguson got married eight years ago and have

Required information Skip to question [The following information applies to the questions displayed below.] John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2021, John worked as a computer technician at a local university earning a salary of $152,000, and Sandy worked part time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions, and their itemized deductions were well over the standard deduction amount last year. Assume the Fergusons did not receive an advance payment for the 2021 individual recovery credit because they are not eligible for the credit. Use Exhibit 8-10, Tax Rate Schedule, Dividends and Capital Gains Tax Rates, 2021 AMT exemption for reference. The Fergusons reported making the following payments during the year: State income taxes of $4,400. Federal tax withholding of $21,000. Alimony payments to Johns former wife of $10,000 (divorced 12/31/2014). Child support payments for Johns child with his former wife of $4,100. $12,200 of real property taxes. Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer. $3,600 to Kid Care day care center for Samanthas care while John and Sandy worked. $14,000 interest on their home mortgage ($400,000 acquisition debt). $3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car. $15,000 cash charitable contributions to qualified charities. Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000. rev: 10_21_2021_QC_CS-282339 a. What is the Fergusons' 2021 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable? (Round your intermediate computations to the nearest whole dollar amount.)

EXHIBIT 8-10 Child and Dependent Care Credit Percentage

If AGI is over But not over Then the percentage is
$ 0 $125,000 50%
125,000 127,000 49
127,000 129,000 48
129,000 131,000 47
181,000 183,000 21
183,000 400,000 20
400,000 402,000 19
402,000 404,000 18
434,000 436,000 2
436,000 438,000 1
438,000 0

Source: Source: Internal Revenue Code. " 21. Expenses For Household And Dependent Care Services Necessary For Gainful Employment."

2021 Tax Rate Schedules

Individuals

Schedule X-Single

If taxable income is over: But not over: The tax is:
$ 0 $ 9,950 10% of taxable income
$ 9,950 $ 40,525 $995 plus 12% of the excess over $9,950
$ 40,525 $ 86,375 $4,664 plus 22% of the excess over $40,525
$ 86,375 $ 164,925 $14,751 plus 24% of the excess over $86,375
$ 164,925 $ 209,425 $33,603 plus 32% of the excess over $164,925
$ 209,425 $ 523,600 $47,843 plus 35% of the excess over $209,425
$ 523,600 $157,804.25 plus 37% of the excess over $523,600

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over: But not over: The tax is:
$ 0 $ 19,900 10% of taxable income
$ 19,900 $ 81,050 $1,990 plus 12% of the excess over $19,900
$ 81,050 $ 172,750 $9,328 plus 22% of the excess over $81,050
$ 172,750 $ 329,850 $29,502 plus 24% of the excess over $172,750
$ 329,850 $ 418,850 $67,206 plus 32% of the excess over $329,850
$ 418,850 $ 628,300 $95,686 plus 35% of the excess over $418,850
$ 628,300 $168,993.50 plus 37% of the excess over $628,300

Schedule Z-Head of Household

If taxable income is over: But not over: The tax is:
$ 0 $ 14,200 10% of taxable income
$ 14,200 $ 54,200 $1,420 plus 12% of the excess over $14,200
$ 54,200 $ 86,350 $6,220 plus 22% of the excess over $54,200
$ 86,350 $ 164,900 $13,293 plus 24% of the excess over $86,350
$ 164,900 $ 209,400 $32,145 plus 32% of the excess over $164,900
$ 209,400 $ 523,600 $46,385 plus 35% of the excess over $209,400
$ 523,600 $156,355 plus 37% of the excess over $523,600

Schedule Y-2-Married Filing Separately

If taxable income is over: But not over: The tax is:
$ 0 $ 9,950 10% of taxable income
$ 9,950 $ 40,525 $995 plus 12% of the excess over $ 9,950
$ 40,525 $ 86,375 $4,664 plus 22% of the excess over $40,525
$ 86,375 $ 164,925 $14,751 plus 24% of the excess over $86,375
$ 164,925 $ 209,425 $33,603 plus 32% of the excess over $164,925
$ 209,425 $ 314,150 $47,843 plus 35% of the excess over $209,425
$ 314,150 $84,496.75 plus 37% of the excess over $314,150

Tax Rates for Net Capital Gains and Qualified Dividends

Rate* Taxable Income
Married Filing Jointly Married Filing Separately Single Head of Household Trusts and Estates
0% $0 - $80,800 $0 - $40,400 $0 - $40,400 $0 - $54,100 $0 - $2,700
15% $80,801 - $501,600 $40,401 - $250,800 $40,401 - $445,850 $54,101 - $473,750 $2,701 - $13,250
20% $501,601+ $250,801+ $445,851+ $473,751+ $13,251+
*This rate applies to the net capital gains and qualified dividends that fall within the range of taxable income specified in the table (net capital gains and qualified dividends are included in taxable income last for this purpose).

EXHIBIT 8-5 2021 AMT Exemptions

Filing Status Exemption Phase-Out Begins at This Level of AMTI Phase-Out Complete for This Level of AMTI
Married filing jointly $114,600 $1,047,200 $1,505,600
Married filing separately 57,300 523,600 752,800
Head of household and single 73,600 523,600 818,000

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

Taxation Of Individuals And Business Entities 2015

Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

6th Edition

978-1259206955, 1259206955, 77862368, 978-0077862367

More Books

Students also viewed these Accounting questions

Question

=+d) What assumptions have you made to answer part c?

Answered: 1 week ago