Answered: Jeremy earned $100,400 in salary and…

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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Jeremy earned $100,400 in salary and $6,400 in interest income during the year. Jeremy’s employer withheld $11,000 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $24,200 in itemized deductions

a. Determine Jeremy’s tax refund or taxes due.

b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $5,550. What is Jeremy’s tax refund or tax due including the tax on the capital gain?

c. Assume the original facts except that Jeremy has only $7,000 in itemized deductions. What is Jeremy’s tax refund or tax due?

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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