Jennifer and Jason Greco are married and file a joint tax return. Their two dependent children (Jim,
Question:
Jennifer and Jason Greco are married and file a joint tax return. Their two dependent children (Jim, age 14 and Jessica, age 16); both live at home. The Grecos have the following income and expenses:
Income:
Jennifer's salary.........................................................$120,000
Jason's net profit from his sole proprietorship........................148,000
Interest income on State of Texas bonds...............................10,000
Interest income on corporate bonds.....................................12,000
Cash dividends............................................................19,000
Long-term capital gain from sale of stock.............................70,000
Expenses:
Interest on the $850,000 principal from their
home acquisition mortgage.............................................48,000
Real property taxes on their home......................................11,000
Charitable contributions to their church...............................49,000
Federal income tax withheld from Jennifer's salary.................35,000
Estimated federal tax payments for this year.........................30,000
a. What is their adjusted gross income and taxable income for 2016?
b. What is their net tax due or refund expected for 2016?
c. Using the total tax you computed in part b, what is their effective tax rate as a percentage of their adjusted gross income?
Step by Step Answer:
Taxation For Decision Makers 2017
ISBN: 9781119330417
7th Edition
Authors: Shirley Dennis Escoffier, Karen Fortin