ACCT 421 Lecture Notes - Lecture 3: Adjusted Gross Income, Alternative Minimum Tax, Child Tax Credit

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magentaporpoise298

17 Sep 2016

School

Old Dominion University

Department

Accounting

Course

ACCT 421

Professor

Vivian Paige

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Document Summary

Chapter 4: individual income tax overview, exemptions, and filing status. Income from all sources exclusions = gross income. Gross income for agi deductions = adjusted gross income (agi) Adjusted gross income (agi) from agi deductions = taxable income: from agi deductions. Taxable income x tax rates = income tax liability. Income tax liability + other taxes = total tax. Total tax credits prepayments= taxes due or refund. Realization: all-inclusive irc 61, exclusions vs deferrals. Exclusion- income that you never pay taxes on (permanent) Character- how the income is taxed (not all income is taxed the same way: ordinary. Wages, rental income, interest income: capital. Income that comes from the disposition of assets that is taxed at preferential rates (lower rate) For agi: known as above the line . End of page 1: tend to be associated with business activities and certain investing activities. From agi: known as below the line , tend to be personal in nature.

Related Questions

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

Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000, and they sold their home this year. They initially purchased the home three years ago for $200,000 and they sold it for $250,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $16,500 of itemized deductions, and they had $6,250 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. (use the tax rate schedules .) tax return info for 2016

a. What is the Jacksonsâ taxable income, and what is their tax liability or (refund)? (Do not round intermediate calculation. Round "Income tax liability", "Total tax", "Taxes payable or Refund due" to 2 decimal places.)

*****(I HAVE BOLDED THE ANSWERS THAT ARE NOT RIGHT, & THOSE ARE THE ONES I NEED HELP WITH)***

	Description	Amount
(1)	Gross income	$100,000
(2)	For AGI deductions	0
(3)	Adjusted gross income	$100,000
(4)	Standard deduction	12,200
(5)	Itemized deductions	16,500
(6)	Greater of standard deductions or itemized deductions	16,500
(7)	Personal and dependency exemptions	23,400
(8)	Total deductions from AGI	39,900
(9)	Taxable income	$60,100
(10)	Income tax liability	$8,122.50
(11)	Other taxes	$0
(12)	Total tax	$8,122.50
(13)	Credits	4,000
(14)	Prepayments	6,250
	Refund due	$2,127.50

lilacelephant861

A- Fill in blanks and choose the correct answer from theparentheses:
Steps to determine tax
-Eight basic steps are used in calculating federal incometaxes:
1- Determine your total income
2. Determine and report yourâ¦â¦â¦â¦â¦â¦â¦â¦â¦ income after subtractingexclusions (net, adjusted gross, taxable, gross)
3. Subtract adjustments to income.
4. Substract either theâ¦â¦â¦â¦â¦â¦â¦â¦â¦..the amount of tax status or youritemize deductions. (adjusted gross income, personal exemptions,IRSâs standard deduction, adjustments to income)
5. Subtract the value of personal â¦â¦â¦â¦â¦â¦â¦.(deductions, exemptions,tax credits, standard deduction)
6. Determine your preliminary tax liability.
7. Subtract theâ¦â¦â¦â¦â¦â¦â¦ for which you qualify. (personal exemptions,itemized deductions, tax credits, adjustments to income)
8. Calculate the balance due the IRS or the amount of yourreturn.

B- Select which term describes each of the following items or partsof the tax return.(please choose the correct answer from theparentheses)

Item Term
1- Carpool money received (Tax-exempt income, Personal exemption, tax credit, deduction)

2- Capital gains (part of total income, part of adjustments togross income included in tax credits, include in deductions

3- Contributions to qualified personal retirements account (IRAs)(Adjustments to gr gross income, included in tax credits, personalexemptions, Included in tax deductions)

4- An amount that changes if you are over 65 years of age (standarddeduction, itemized deductions, tax credits, adjustments to grossincome)

5- State and local taxes( Included in itemized deductions, includedin personal exemptions, included in tax credits, used to calculateadjusted gross income)
6- An amount based on the number of people a taxpayersupports(personal emptions, itemized deductions, standarddeductions, adjusted gross income)

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ACCT 421 Lecture Notes - Lecture 3: Adjusted Gross Income, Alternative Minimum Tax, Child Tax Credit

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