FEDERAL INCOME TAX FORMULA Gross Income - Above the Line Deductions____ Adjusted Gross Income - Itemized or Standard Deduction - Exemptions_________________ Taxable Income x Applicable Marginal Tax Rates for Each Bracket Tax Liability - Tax Credits_________________ = TAX OWED ABRIDGED INCOME TAX ACCOUNTING I. Gross Income [§ 61] — A. Wages‚ Salaries‚ and Tips B. Interest Income C. Dividend Income D. Other (Net) Income—Reduced by Deductible Expenses 1. State & Local
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the sale of a principal residence. The Jacksons incurred $16‚500 of itemized deductions. a. What is the Jackson’s taxable income? $111‚600 realized income $200‚000 minus excluded income $ 50‚000 (gain from sale of house) gross income $150‚000 minus for AGI deductions $ 0 Adjusted gross income $150‚000 minus itemized deductions $ 16‚500 (larger than standard deduction) subtotal $133‚500 minus exemptions
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MaAssignment 1 Title: Marriage and Taxes Introduction: Bill and Mary plan to marry in December of 2012. Bill’s salary is $32‚000 and he owns a residence. His itemized deductions total $12‚000. Mary’s salary is $39‚000. Her itemized deductions total only $1‚600 as she does not own a residence. Assume that 2013 tax rates‚ exemptions‚ and standard deductions are the same as 2012. Task(s): Answer the following questions: a. What will their tax be if they marry before year-end and file a joint return?
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They have itemized deductions of $11‚950 and four exemptions. Assuming an adjusted gross income of $40‚000‚ what is their taxable income for 2011? AGI $ 40‚000.00 Itemized Deduction > Standard (11‚950.00) 4 Exemptions (14‚800.00) Taxable Income $ 13‚250.00 Compute Marie’s taxable income for 2011‚ assuming she is single and claims two dependent children. Her adjusted gross income is $70‚000‚ and she has itemized deductions of $9‚000. AGI $ 70‚000.00 Itemized Deduction > HOH Standard
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They have itemized deductions of $11‚950 and four exemptions. Assuming an adjusted gross income of $40‚000.00 what is their taxable income for 2012? Adjusted Gross Income = $40‚000.00 Less: Itemized Deductions of $12‚250.00 Less: Personal Exemptions of $ 4($3‚700.00) =$14‚800.00 Taxable Income = $12‚950.00 3-32 Compute Marie’s taxable income for 2012‚ assuming she is single and claims two dependent children. Her adjusted gross income is $70‚000‚ and she has itemized deductions of $9‚000
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joint return. They have itemized deductions of $12‚250 and four exemptions. Assuming an adjusted gross income of $40‚000‚ what is their taxable income for 2012? Taxable Income = Adjusted gross income – Itemized deductions – Exemptions Taxable Income = 40‚000 – 12‚250 – (3‚800*4) Taxable Income = 12‚550 32. Compute Marie’s taxable income for 2012‚ assuming she is single and claims two dependent children. Her adjusted gross income is $70‚000‚ and she has itemized deductions of $9‚000. Taxable
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CHAPTER 6 DEDUCTIONS AND LOSSES: IN GENERAL SOLUTIONS TO PROBLEM MATERIALS Question/ Problem 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Learning Objective LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 2 LO 2 LO 2 LO 2 LO 3 LO 3 LO 3 LO 3 LO 3 LO 3 LO 3 LO 3 Topic Allowed income and deductions Deductions for and from AGI Deductions for and from AGI Deductions for and from AGI Deductions for and from AGI Deductions for and from AGI Deductions for and from AGI; deductions
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CHAPTER 7 DEDUCTIONS AND LOSSES: CERTAIN BUSINESS EXPENSES AND LOSSES SOLUTIONS TO PROBLEM MATERIALS Question/ Problem 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Learning Objective LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 1 LO 2 LO 2 LO 3‚ 4 LO 3‚ 4 LO 4 LO 4 LO 4 LO 4 LO 4 LO 4 LO 4 LO 4 LO 4 LO 3‚ 4 LO 5 LO 5 LO 6 LO 6 LO 6 LO 7 LO 7 Topic Bad debts: accounts receivable Bad debts: basis Bad debts: worthlessness Bad debts: recovery Bad debts: business Bad debts:
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b. $11‚900‚ the greater of itemized deductions or the standard deduction of $11‚900. c. $17‚000 = $36‚500 – 11‚900 – (2 x $3‚800). (LO 1.3) 3. a. $23‚000. b. $5‚950‚ the greater of total itemized deductions or the standard deduction amount. c. $13‚250 = $23‚000 – 5‚950 – 3‚800. (LO 1.3) 4. a. $52‚700 = $54‚000 + 1‚700 – 3‚000 ($7‚000 capital loss limited to $3‚000) b. $5‚950 c. $3‚800 d. $42‚950 = $52‚700 – 5‚950 – 3‚800 (LO 1.3) 5. Gross income – Deductions for adjusted gross income =
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COMPREHENSIVE VOLUME--CHAPTER 7--DEDUCTIONS AND LOSSES: CERTAIN BUSINESS EXPENSES AND LOSSES Student: ___________________________________________________________________________ 1. James is in the business of debt collection. He purchased a $20‚000 account receivable from Green Corporation for $15‚000. During the year‚ James collected $17‚000 in final settlement of the account. James can take a $2‚000 bad debt deduction in the current year. True False 2. If a business debt previously
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