Mr. L is age 66, and Mrs. L is age 68. Their itemized deductions totaled $7,000, and they have no dependents. Assume the taxable year is 2017. Compute their income tax on a joint return.
Mr. L is age 66, and Mrs. L is age 68. Their itemized deductions totaled $7,000, and they have no dependents. Assume the taxable year is 2017. Compute their income tax on a joint return.
| Dividend eligible for 0% preferential rate | | 3,755 |
| Capital gain eligible for 0% preferential rate | | 3,345 |
| Mrs. L’s salary | | 28,800 |
Individual Tax Rate Schedules Married Filing Jointly and Surviving Spouse If taxable income is: Not over $18,650 Over $18,650 but not over $75,900 Over $75,900 but not over $153,100 Over $153,100 but not over $233,350 $29,752.50 + 28% of excess over $153,100 Over $233,350 but not over $416,700 $52,222.50 + 33% of excess over $233,350 Over $416,700 but not over $470,700 $112,728 + 35% of excess over $416,700 Over $470,700 Married Filing Separately If taxable income is: Not over $9,325 Over $9,325 but not over $37,950 Over $37,950 but not over $76,550 Over $76,550 but not over $116,675 Over $116,675 but not over $208,350 $26,111.25 + 33% of excess over $116,675 Over $208,350 but not over $235,350 $56,364 + 35% of excess over $208,350 Over $235,350 Heads of Household If taxable income is: Not over $13,350 Over $13,350 but not over $50,800 Over $50,800 but not over $131,200 $6,952.50 + 25% of excess over $50,800 Over $131,200 but not over $212,500 $27,052.50 + 28% of excess over $131,200 Over $212,500 but not over $416,700 $49,816.50 + 33% of excess over $212,500 Over $416,700 but not over $444,550 $117,202.50 + 35% of excess over $416,700 Over $444,550 Single If taxable income is: Not over $9,325 Over $9,325 but not over $37,950 Over $37,950 but not over $91,900 Over $91,900 but not over $191,650 Over $191,650 but not over $416,700 $46,643.75 33% of excess over $191,650 Over $416,700 but not over $418,400 $120,910.25 + 35% of excess over $416,700 Over $418,400 The tax is: 10% of taxable income $1,865.00 + 15% of excess over $18,650 $10,452.50 + 25% of excess over $75,900 $131,628 + 39.6% of excess over $470,700 The tax is: 10% of taxable income $932.50 + 15% of excess over $9,325 $5,226.25 + 25% of excess over $37,950 $14,876.25 + 28% of excess over $76,550 $65,814 39.6% of excess over $235,350 The tax is: 10% of taxable income $1,335.00 + 15% of excess over $13,350 $126,950.00 + 39.6% of excess over $444,550 The tax is: 10% of taxable income $932.50 + 15% of excess over $9,325 $5,226.25 + 25% of excess over $37,950 $18,713.75 + 28% of excess over $91,900 $121,505.25 + 39.6% of excess over $418,400
Tax on $5,500 of income is 10% of it. Thus, tax liability is $550.
Standard deduction:
Standard deduction applicable for married filing joint couple is $12,700. When the age of taxpayer filing joint exceeds 65 he or she is eligible for additional standard deduction of $1,250. Here age of both couple is above 65, thus, total additional standard deduction is $2,500, added to regular standard deduction of $12,700, total of standard deduction comes to $15,200.
*Hope the above explanation helps, please comment if further explanation is required. Your rating is appreciated*
| Particulars | Amount |
| Wages | 28800 |
| Dividends | 3755 |
| Capital gains | 3345 |
| Total income | 35900 |
| |
| Less standard deduction | 15200 |
| Less personal exemption | 8100 |
| |
| Taxable income | 12600 |
| |
| Income taxable at 0% | 7100 |
| Balance income taxable at regular rates | 5500 |
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