Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 138

Find the amount of taxable income and the tax owed for the following people. Use the tax rate schedule. The letter following the names indicates the marital status, and all married people are filing jointly. (See Examples.)
Find Taxable Income and the Income Tax Amount
Find the taxable income and income tax for each of the following.
(a) Herbert White, married filing jointly, 5 daughters, adjusted gross income $48,300
(b) Onita Fields, single, no dependents, adjusted gross income $28,400
(c) Imogene Griffin, single, head of household, 2 children, adjusted gross income $74,500
(d) Jeffy Norwood, married filing separately, 1 child, adjusted gross income $145,000
SOLUTION
(a) Herbert White + spouse + 5 daughters = 7 exemptions

The tax rate for married filing jointly with less than $17,000 in taxable income is 10%.

(b) Onita Fields = 1 exemption


(d) Jeffy Norwood + 1 child = 2 exemptions

Using Itemized Deductions to Find Taxable Income and Income Tax

Kristina Kelly is single, has 1 child, and had an adjusted gross income of $58,700 last year. She paid $3240 in real estate taxes, $7280 in home mortgage interest, and donated $1200 to her church. Find her taxable income and her income tax if she files as head of household.
SOLUTION
Itemized deductions = $3240 + $7280 + $1200 = $11,720
Her itemized deductions of $11,720 exceed the standard deduction of $5800 for a single person, so she uses the itemized deduction amount.