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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.
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 $.
Expert Answer
1).
| Particulars | Amount($) | 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)
