Required information

Problem 4-26 (LO 4-1) Tax for individuals

[The following information applies to the questions displayed below.] Jeremy earned $90,000 in salary and $6,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $12,000 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the tax rate schedules.). (Do not round intermediate calculations. Round "Income tax liability" to 2 decimal places.)

a. Use the 2017 tax rate schedules to determine Jeremys taxes due.

	Description		Amount
(1)	Gross income
(2)	For AGI deductions
(3)	Adjusted gross income
(4)	Standard deduction
(5)	Itemized deductions
(6)
(7)	Personal and dependency exemptions
(8)	Taxable income
	Income tax liability

b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $4,000. What is Jeremys tax liability including the tax on the capital gain?

	Description		Amount
(1)	Gross income
(2)	For AGI deductions
(3)	Adjusted gross income
(4)	Standard deduction
(5)	Itemized deductions
(6)
(7)	Personal and dependency exemptions
(8)	Taxable income
	Income tax liability

c. Assume the original facts except that Jeremy had only $6,000 in itemized deductions. What is Jeremys total income tax liability?

	Description		Amount
(1)	Gross income
(2)	For AGI deductions
(3)	Adjusted gross income
(4)	Standard deduction
(5)	Itemized deductions
(6)
(7)	Personal and dependency exemptions
(8)	Taxable income
	Income tax liability