Q:

Abraham is a single taxpayer with no dependents. He received $297 in bank interest and $1500 for a educational expenses deduction. His charitable contributions were $2000. Use the information to complete the table below: Wages, tips, and other compensation: $47513; Social Security Wages: $47513; Medicare wages: $47513; Federal tax withheld: $4325; State tax withheld: $2790. Assume &3500 per exemption and use the tax rate for the income interval for $32550 to $78850 of $4481.25 + 25% for taxable income over $32550. What are his total itemized deductions, interest, adjusted gross income, taxable income, tax due, and tax owed?

Accepted Solution

A:
Itemized deductions = 1,500 + 2,000 + 2,790 = 6,290
Adjusted gross income = 47,513 - 6,290 = 41,223
Taxable income = 41,223 - 3,500 = 37,723Tax = $4481.25 + 25% for taxable income over $32550 Tax due = 4,481.25 + 0.25(37,723 - 32,550) = 5,774.5
Tax owed = 5,774.50 - 4,325 = 1,449.5

As a conclusion for the solution:

Total itemized deductions =  $6,290
Interest =  $297
Adjusted gross income = $41,223
Taxable income = $37,723
Tax due = $5,774.50
Tax owed = $1,449.50