Question

Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds. Marc contributed $2,500 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,500 (under a divorce decree effective June 1, 2005). Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $1,000 child tax credit for Matthew. Marc and Michelle paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $5,500 in federal income taxes withheld from their paychecks during the course of the year. (use the 2016 tax rate schedules).
1. What is the total amount of Marc and Michelle’s deductions from AGI?
2. What is Marc and Michelle’s taxable income?
3. What is Marc and Michelle’s taxable income?

Answer 1

Answer:

$24750

$47750

Explanation:

Total amount of Marc and Michelle's deduction. From AGI:

MAX of (ITEMIZED DEDUCTION or MARRIED FILING JOINTLY)

2016 TAX SCHEDULE :

STANDARD DEDUCTION FOR MARRIED FILING JOINTLY = $12600

Personal and dependency deduction = 4,050

(4050 * 3). = $12,150

Deduction from AGI = $12,600 + $12,150 = $24750

Taxable income :

Gross income = (Marc and Michelle's salary + corporate bond)

= $(64000 + 12000 + 500) = $76500

Contribution + alimony = ($2500 + $1500) = 4000

Taxable income = ($76500 - 4000 - 24750) = $47750