ACCT 3200 Lecture Notes - Lecture 1: Itemized Deduction, Standard Deduction, Casualty Loss

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26 Aug 2016

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Tax formula: below the line deductions, from agi. Subtract these three from agi for taxable income (tax base) Take the greater of personal dependency deductions or standardized deductions. Basic standard deduction: completely tied to filing status. Additional standard deduction: for taxpayers age 65 and older and/or legally blind (one additional standard deduction for each that applies) It"s possible that you could be working pt and your parents claim you as a dependent and you do not have a high standardized deduction: most of income will be taxed. Get basic standard deduction and additional standard deduction, compare to itemized deductions and take larger of the two. Dependent gets the greater of: or +earned income. Earned income: w-2, your effort and labor, requires work. When claimed you lose personal exemption and standard deduction is greatly reduced. Only claimed if they give you a benefit in total that exceeds the standard deduction amount of the taxpayer.

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Jeremy earned $140,000 in salary and $1,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $14,500 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the tax rate schedules.). (Do not round intermediate calculations. Round "Income tax liability" to 2 decimal places.)

Tax Rate Schedule: https://ezto-cf-media.mheducation.com/Media/Connect_Production/bne/accounting/spilker_9e/taxrateschedulea.jpg

a:. Use the 2017 tax rate schedules to determine Jeremyâs taxes due.

	Description	Amount
(1)	Gross income
(2)	For AGI deductions	0
(3)	Adjusted gross income
(4)	Standard deduction
(5)	Itemized deductions
(6)	Greater of standard deductions or itemized deductions
(7)	Personal and dependency exemptions
(8)	Taxable income
	Income tax liability

b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $6,500. What is Jeremyâs tax liability including the tax on the capital gain?

	Description	Amount
(1)	Gross income	$147,500
(2)	For AGI deductions
(3)	Adjusted gross income	$147,500
(4)	Standard deduction
(5)	Itemized deductions
(6)
(7)	Personal and dependency exemptions
(8)	Taxable income	$147,500
	Income tax liability

c. Assume the original facts except that Jeremy had only $3,500 in itemized deductions. What is Jeremyâs total income tax liability?

DescriptionAmount

(1)Gross income$141,000

(2)For AGI deductions0

(3)Adjusted gross income

$141,000

(4)Standard deduction

(5)Itemized deductions

(6)

(7)Personal and dependency exemptions

(8)Taxable income

income tax liability

violetdolphin397

âLauren, a singleâ taxpayer, had the following income and deductions for the tax year 2017â:

Requirement a. Compute Lauren's taxable income and federal tax liability for 2017.(Calculate the tax using the tax rate schedule. Do not round interim tax calculations. Round the amount entered into the cell to the nearest wholeâdollar.)

Requirement b. Compute Lauren's marginal, average, and effective tax rates. â(Round your answers to two decimalâ places, X.XX%.)

Requirement c. For tax planningâ purposes, which of the three rates in Part b is the mostâ important?

INCOME:	Salary	$90,000
	Business Income	24,000
	Interest income from bonds	6,000
	Tax-exempt bond interest	4,400
	TOTAL INCOME	$124,400

DEDUCTIONS:	Business expenses	$11,500
	Itemized deductions	10,000
	Personal exemption	4,050
	TOTAL DEDUCTIONS	$25,550

PERSONAL AND DEPENDENCY EXEMPTION AND PHASE-OUTS
Personal and dependency exemption		$4,050
Phase-outs for high income taxpayers:
Personal and dependency exemptions are reduced by 2% for each $2,500 increment (or part of increment)
for AGI above the threshold amount.
Itemized deductions are reduced by 3% for each dollar of AGI above the threshold amounts (taxpayers cannot
lose more than 80% of their allowable itemized deductions).
For both provisions, the AGI threshold amounts are:
	Married individuals filing joint returns and surviving spouses	$313,800
	Heads of households	287,650
	Unmarried individuals (other than surviving spouses and heads of households)	261,500
	Married individuals filing separate returns	156,900

STANDARD DEDUCTION
Filing Status
Married individuals filing joint returns and surviving spouses		$12,700
Heads of households		9,350
Unmarried individuals (other than surviving spouses and heads of households)		6,350
Married individuals filing separate returns		6,350
Additional standard deduction for the aged and the blind
	Individual who is married and surviving spouses	1,250	*
	Individual who is unmarried and not a surviving spouse	1,550	*
Taxpayer claimed as dependent on another taxpayerâs return: Greater of (1) earned income plus $350 or (2) $1,050.
* These amounts are $2,500 and $3,100, respectively, for a taxpayer who is both aged and blind.

Single

If taxable income is: The tax is:

Not over $9,325. . . . . . . . . . . . . . . . . . . .10% of taxable income.

Over $9,325 but not over $37,950. . . . . . . . .$932.50 + 15% of the excess over $9,325.

Over $37,950 but not over $91,900. . . . . . .$5,226.25 + 25% of the excess over $37,950.

Over $91,900 but not over $191,650. . . . . .$18,713.75 + 28% of the excess over $91,900.

Over $191,650 but not over $416,700. . . . .$46,643.75 + 33% of the excess over $191,650.

Over $416,700 but not over $418,400. . . . .$120,910.25 + 35% of the excess over $416,700.

Over $418,400. . . . . . . . . . . . . . . . . . . . .$121,505.25 + 39.6% of the excess over $418,400.

ultramarinemanatee287

please answer all

7. Amended individual returns are filed on: (Points : 1)

Form 1040X
Form 1120S
Form 1041
Form 1040Amend

Question 8.8. Which of the following is not considered one of the 5 basic taxable or reporting entities?? (Points : 1)

Partnership
Corporation
Portfolio
Individual
Trust

Question 9.9. Married taxpayers may double their standard deduction amount by filing separate returns. (Points : 1)

True
False

Question 10.10. An item is not included in gross income unless the tax law specifies that the item is subject to taxation. (Points : 1)

True
False

Question 11.11. For taxpayers who do not itemize deductions, the standard deduction amount is subtracted from the taxpayer's adjusted gross income. (Points : 1)

True
False

Question 12.12. An individual is a head of household. What is her/his 2016 standard deduction? (Points : 1)

$6,300
$9,300
$12,600
$14,800
None of the above

Question 13.13. Eugene & Velma are married. For 2016, Eugene earned $25,000 & Velma earned $30,000. They have decided to file separate returns & are each entitled to claim one personal exemption. They have no deductions for adjusted gross income. Eugene's itemized deductions are $11,200 and Velma's are $4,000. Assuming Eugene and Velma do not live in a community property state, what is Eugene's taxable income? (Points : 1)

$9,750
$13,800
$14,700
$21,000
None of the above

fuchsiayak538

ACCT 3200 Lecture Notes - Lecture 1: Itemized Deduction, Standard Deduction, Casualty Loss

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