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17 October, 04:08

Sheila and Joe Wells are married with two dependent children. During 2019, they have gross income of $159,800, deductions for AGI of $5,500, itemized deductions of $25,000 and tax credits of $2,000. The Wells' had $22,000 withheld by their employer for federal income tax. They have a tax (due/refund) of $.

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  1. 17 October, 04:29
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    They have a tax due of $6,453.36

    Explanation:

    Gross income = $159,800

    Deductions for AGI = $5,500

    Itemized deductions = $25,000

    Tax credits = $2,000

    Federal income tax = $22,000

    AGI = gross income - deductions for AGI

    AGI = 159800 - 5500

    AGI = 154300

    Taxable income = AGI - itemized deductions

    Taxable income = 154300 - 25000

    Taxable income = $1,29,300‬

    Using tax table of 2019

    Gross tax = 32170 + (129300 - 88359) * 24%

    Gross tax = $17,546.64‬

    Tax due = gross tax - tax credit - withholding

    Tax due is = 17546.64 - 2000 - 22000 = - 6453.36

    Tax due is = $6,453.36
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