USE 2021 TAX RATES THE ABOVE ONES

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 a local university earning a salary of $153,800, and Sandy worked part time as a receptionist for a law firm earning a salary of $30,800. John also does some Web design work on the side and reported revenues of $5.800 and associated expenses of $1.650. The Fergusons received $1,160 in qualified dividends and a $290 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 $4.850. Federal tax withholding of $21.000. Alimony payments to John's former wife of $10.900 (divorced 12/31/2014). Child support payments for John's child with his former wife of $4,280. $12,380 of real property taxes. Sandy was reimbursed $690 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 Samantha's care while John and Sandy worked. $15.800 interest on their home mortgage (5400.000 acquisition debt). $3.270 interest on a $43,600 home-equity loan. They used the loan to pay for a family vacation and new car. $15.900 cash charitable contributions to qualified charities. Donation of used furniture to Goodwill. The furniture had a fair market value of $580 and cost $2.900. . 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.) Answer is complete but not entirely correct. Tax refund 25,425 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." 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 S4.664 plus 22% of the excess over $40,525 $ 86,375 S 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 S 523,600 S47.843 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 S 81,050 $1.990 plus 12% of the excess over $19.900 $ 81,050 S 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 S 628,300 595,686 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 S 54,200 $1.420 plus 12% of the excess over $14,200 $ 54,200 S 86,350 $6.220 plus 22% of the excess over $54,200 $ 86,350 S 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 S 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 S4.664 plus 22% of the excess over $40,525 $ 86,375 S 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 Taxable income Rate* Married Filing Jointly Married Filing Separately Single Head of Household Trusts and Estates 0% $0 - $80,800 SO - $40,400 $0 - $40,400 SO - $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 3-5 2021 AMT Exemptions Filing Status Exemption Married filing jointly Married filing separately Head of household and single $114,600 57.300 73,600 Phase-Out Begins at Phase-Out Complete This Level of AMTI for This Level of AMTI $1.047.2001 $1.505.600 523,600 752.800 523.600 818,000 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 a local university earning a salary of $153,800, and Sandy worked part time as a receptionist for a law firm earning a salary of $30,800. John also does some Web design work on the side and reported revenues of $5.800 and associated expenses of $1.650. The Fergusons received $1,160 in qualified dividends and a $290 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 $4.850. Federal tax withholding of $21.000. Alimony payments to John's former wife of $10.900 (divorced 12/31/2014). Child support payments for John's child with his former wife of $4,280. $12,380 of real property taxes. Sandy was reimbursed $690 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 Samantha's care while John and Sandy worked. $15.800 interest on their home mortgage (5400.000 acquisition debt). $3.270 interest on a $43,600 home-equity loan. They used the loan to pay for a family vacation and new car. $15.900 cash charitable contributions to qualified charities. Donation of used furniture to Goodwill. The furniture had a fair market value of $580 and cost $2.900. . 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.) Answer is complete but not entirely correct. Tax refund 25,425 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." 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 S4.664 plus 22% of the excess over $40,525 $ 86,375 S 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 S 523,600 S47.843 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 S 81,050 $1.990 plus 12% of the excess over $19.900 $ 81,050 S 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 S 628,300 595,686 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 S 54,200 $1.420 plus 12% of the excess over $14,200 $ 54,200 S 86,350 $6.220 plus 22% of the excess over $54,200 $ 86,350 S 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 S 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 S4.664 plus 22% of the excess over $40,525 $ 86,375 S 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 Taxable income Rate* Married Filing Jointly Married Filing Separately Single Head of Household Trusts and Estates 0% $0 - $80,800 SO - $40,400 $0 - $40,400 SO - $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 3-5 2021 AMT Exemptions Filing Status Exemption Married filing jointly Married filing separately Head of household and single $114,600 57.300 73,600 Phase-Out Begins at Phase-Out Complete This Level of AMTI for This Level of AMTI $1.047.2001 $1.505.600 523,600 752.800 523.600 818,000