Tax Homework (use your notes to help - Tax Brackets and Standard Deductions)

Kathleen Kramer (SS# 444551111) & John Kramer (SS# 456891234) live at 123 Griffin St.

Anywhere, TX 78945. Kathleen and John were married six months after graduating college.

Kathleen is a marketing analyst and John is a firefighter. They have no children.

According to their W2s, Kathleen made $34,435 for the year and had $2,546 withheld from

her pay for federal income tax. John made $27,389 for the year and had $1,345 withheld from

his pay for federal income taxes. They paid student loans from attending Baylor University

during the year with interest for their loans totaling $2,035. John and Kathleen have an

emergency savings account set up (since they learned the importance of that in an accounting

class they once took!) and it earned interest totaling $111 for the year. In August they took a

trip to California and Kathleen was actually chosen as a contestant on the Price is Right. She

was a big winner of an outdoor adventure themed package worth $25,000 and received a set

of mountain bikes, a boat and snow skis. John had a birthday and his grandfather gave him

$10,000. Kathleen & John own a home and paid $5,000 in property taxes.

Problem

1. What is the best filing status for Kathleen and John?

Answer:

2. What is their adjusted gross income?

Answer:

3. Should Kathleen and John itemize deductions or take the standard deduction?

Answer:

4. What is their taxable income?

Answer:

5. Will they pay taxes this year or receive a refund? And how much will they pay or be

refunded?

Answer: