Tax
knohe_
copy_of_a360_problem_mod02_2.xlsxTax Formula for Individuals
| Tax Formula for Individuals | ||||
| Income from whatever source derived: | ||||
| $ - 0 | ||||
| - 0 | ||||
| - 0 | ||||
| Total income | - 0 | |||
| Minus: Exclusions | ||||
| - 0 | ||||
| - 0 | ||||
| - 0 | ||||
| - 0 | - 0 | |||
| Gross Income | - 0 | |||
| Minus: Deductions for adjusted gross income (AGI) | ||||
| - 0 | ||||
| - 0 | ||||
| - 0 | ||||
| $ - 0 | ||||
| - 0 | - 0 | |||
| Adjusted gross income (AGI) | - 0 | |||
| Minus: Deductions from adjusted gross income (AGI) | ||||
| - 0 | ||||
| - 0 | ||||
| - 0 | ||||
| $ - 0 | ||||
| - 0 | - 0 | |||
| Taxable income | - 0 | |||
| Gross income tax (Use current year tax table) | - 0 | |||
| Minus: Payments | ||||
| - 0 | ||||
| - 0 | - 0 | |||
| Net income tax payable or (refund due): | $ - 0 | |||
PR 2-1
| The following information relates to two married couples: | |||||||||
| Lanes | Waynes | ||||||||
| Salary (earned by one spouse) | $ 32,000 | $ 115,000 | |||||||
| Interest Income | 1,000 | 10,000 | |||||||
| Deductible IRA Contributions | 5,000 | - 0 | |||||||
| Itemized deductions | 15,000 | 15,000 | |||||||
| Exemptions | 7,800 | 7,800 | |||||||
| Withholding | 700 | 18,700 | |||||||
| Required: | |||||||||
| Compute the current year tax due or refund due for each couple using the Tax Formula for Individuals. Assume that the itemized deductions have been reduced by the applicable floors. Ignore credits. | |||||||||
| Solution | |||||||||
| Tax Formula for Individuals: Lanes | Tax Formula for Individuals: Waynes | ||||||||
PR 2-2
| Anna, age 65, who lives with her unmarried son, Mario, received $7,000, which was used for her support during the year. The sources of support were as follows: | ||||||||
| Social security benefits | $ 1,500 | |||||||
| Mario | 2,600 | |||||||
| Caroline, an unrelated friend | 800 | |||||||
| Doug, Anna's son | 500 | |||||||
| Elaine, Anna's sister | 1,600 | |||||||
| Total | $ 7,000 | |||||||
| Required: | Solution | |||||||
| a. Who is eligible to claim Anna as a dependent? | ||||||||
| b. What must be done before Mario can claim the exemption? | ||||||||
| c. Can Mario claim an old age allowance for this mother? Explain. | ||||||||
PR 2-3
| The following information relates to Tom, a single taxpayer, age 18: | |||||||||||||||||||
| Salary | $ 1,800 | ||||||||||||||||||
| Interest Income | 1,600 | ||||||||||||||||||
| Itemized deductions | 600 | ||||||||||||||||||
| Required: | |||||||||||||||||||
| a. Compute Tom's taxable income assuming he is self-supporting. Use the Tax Formula for Individuals. | |||||||||||||||||||
| b. Compute Tom's taxable income assuming he is a dependent of his parents. | |||||||||||||||||||
| Solution | |||||||||||||||||||
| Tax Formula for Individuals: Tom - Self-Supporting | Tax Formula for Individuals: Tom - Dependent | ||||||||||||||||||
|
Matthew: Note: Because the total of the Standard Deduction and Personal Exemption is greater than AGI, there is no taxable income. Show Taxable Income as $0. |
Matthew: Note: Because Tom is a is a dependent on his parent's tax return, his standard deduction is limited to his earned income ($1,800 Salary) plus $300. |
Matthew: Note: Because Tom is a dependent on his parent's tax return, he is not able to use the personal exemption. | |||||||||||||||||
