1) Many years have gone by since Jack and Belinda graduated from college and began their working careers. They both make good salaries. They consider that they are paying too much in federal income taxes. Johnsons’ total income last year included Jack’s salary of= $63,000 and Belinda’s salary of= $84,000. She donated= $3000 to her 401(k) for retirement. She earned $400 in interest on savings and checking and $3000 interest income from trust that is taxed in similar way as interest income from checking and savings accounts. Jack donated $3000 into a traditional IRA.
a) Determine the Johnsons’ reportable gross income on their joint tax return?
b) Compute their adjusted gross income?
c) Determine the total value of their exemptions?
d) How much is = standard deduction for Johnsons?
e) Johnsons are purchasing a home which has monthly mortgage payments of $3000, or $36,000 a year. Of this amount, $32,800 goes for interest and real estate property taxes. Couple has an additional $14,000 in itemized deductions. Compute their taxable income and tax liability.
f) Suppose they had combined $18,000 in federal income taxes withheld, how much of refund will Johnsons get?
g) Determine their marginal tax rate.
h) Compute their average tax rate based on gross income
i) Name 3 extra methods that Johnsons might decreas their tax liability next year.
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