Jason and Peggy are married, file jointly, and have one dependent (12-year old qualifying child). Jason receives an $87,000 salary. Peggy is self-employed. Her sole proprietorship's revenues are $99,000, and its expenses are $52,000. Jason and Peggy each make a $6,000 deductible contribution to a traditional IRA. Their itemized deductions are $28,000. Federal income taxes of $7,400 are withheld from Jason's paychecks, and Peggy makes $3,400 of estimated tax payments. Read the requirement. First, compute their gross income. Gross income Filing Status Married individuals filing joint returns and surviving spouses $24,400 Heads of households $18,350Unmarried individuals (other than surviving spouses and heads of households)$12,200Married individuals filing separate returns$12,200Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses$1,300Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse$1,650Taxpayer claimed as dependent on another taxpayerâ€™s return: Greater of (1) earned income plus $350 or (2) $1,100.* These amounts are $2,600 and $3,300, respectively, for a taxpayer who is both aged and blind. If taxable income is: The tax is: Not over $19,400 10% of taxable income. Over $19,400 but not over $78,950 $1,940.00 + 12% of the excess over $19,400. Over $78,950 but not over $168,400 $9,086.00 + 22% of the excess over $78,950. Over $168,400 but not over $321,450 $28,765.00 + 24% of the excess over $168,400. Over $321,450 but not over $408,200 $65,497.00 + 32% of the excess over $321,450. Over $408,200 but not over $612,350 $93,257.00 + 35% of the excess over $408,200. Over $612,350 $164,709.50 + 37% of the excess over $612,350.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Jason and Peggy are married, file jointly, and have one dependent (12-year old qualifying child). Jason receives an $87,000 salary. Peggy

is self-employed. Her sole proprietorship's revenues are $99,000, and its expenses are $52,000. Jason and Peggy each make a $6,000 deductible contribution to a traditional IRA. Their itemized deductions are $28,000.
Federal income taxes of $7,400 are withheld from Jason's paychecks, and

Peggy makes $3,400 of estimated tax payments.

Read the requirement.

First, compute their gross income.



Gross income

Filing Status
Married individuals filing joint returns and surviving spouses	$24,400
Heads of households

$18,350Unmarried individuals (other than surviving spouses and heads of households)$12,200Married individuals filing separate returns$12,200Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses$1,300*Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse$1,650*Taxpayer claimed as dependent on another taxpayerâ€™s return: Greater of (1) earned income plus $350 or (2) $1,100.* These amounts are $2,600 and $3,300, respectively, for a taxpayer who is both aged and blind.

If taxable income is:	The tax is:
Not over $19,400	10% of taxable income.
Over $19,400 but not over $78,950	$1,940.00 + 12% of the excess over $19,400.
Over $78,950 but not over $168,400	$9,086.00 + 22% of the excess over $78,950.
Over $168,400 but not over $321,450	$28,765.00 + 24% of the excess over $168,400.
Over $321,450 but not over $408,200	$65,497.00 + 32% of the excess over $321,450.
Over $408,200 but not over $612,350	$93,257.00 + 35% of the excess over $408,200.
Over $612,350	$164,709.50 + 37% of the excess over $612,350.

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