# Question & Answer: Arthur and Cora are married and have 2 dependent children. They have a gross income of \$94,860. Their allowable deductions for adjusted gross income total \$…..

Arthur and Cora are married and have 2 dependent children. They have a gross income of \$94,860. Their allowable deductions for adjusted gross income total \$5,280, and they have total allowable itemized deductions of \$13,940. The standard deduction for 2016 is \$12,600 and the personal exemption is \$4,050.

Refer Tax Rate Schedules to answer the following questions.

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Question & Answer: Arthur and Cora are married and have 2 dependent children. They have a gross income of \$94,860. Their allowable deductions for adjusted gross income total \$…..
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Note: The child tax credit in 2016 is \$1,000 per child.

a. Arthur and Cora’s 2016 taxable income is \$.

b. Arthur and Cora’s 2016 income tax is \$.

c. If Arthur has \$3,000 and Cora has \$3,300 withheld from their paychecks then they (refund or pay addtional taxes) of \$.

1).

 Particulars Amount(\$) Amount(\$) Gross income 94860 Deduction for AGI (5280) Adjusted Gross Income(94860-5280) 89580 Deduction from AGI: The Greater of : Itemized Deduction 13940 or Standard Deduction 12600 (13940) Personal and Dependency Exemptions (4*4050) (16200) Taxable Income(89580-13940-16200) 59440

2).

Tax Calculation = \$1855 + (15% * (\$59440 – \$18550)) = \$7989

Less : Child tax Credit (2*1000) = (\$2000)

Net Tax Liability (\$7989-\$2000) = \$5989

3). they are entitled to a refund of \$ 311 (\$5989 – \$3000 – \$3300)