Jeff and Kathy O'Connor file a 1040 jointly. Jeff earned $39,000 and Kathy earned $13,700 working part time. The O'Connors have four children. Jeff contributed $3,500 to his IRA. They had $5,200 in medical and dental expenses. They paid $4,390 in real

Question

estate taxes, $7,260 in mortgage interest, and made $1,500 in charitable contributions. Together they had $1,825 withheld for income tax during the year. Using a tax table, how much additional tax do they owe or what is their refund?

Answer 1

The O'Connors will receive a $472 refund.
Total income: $52,700; subtract the IRA contribution; $52,700 - $3,500 = $49,200
Medical and dental: $5,200; 7.5% of adjusted gross income is 0.075 × $49,200 = $3,690;
$5,200 - $3,690 = $1,510 is deductible.
Total deductions: $1,510 + $13,150 = $14,660;
Deduct for exemptions: 6 × $3,500 = $21,000;
Subtract deductions and exemptions from the adjusted gross income:
$49,200 - $14,660 - $21,000 = $13,540.
Use the tax table to find tax: $1,353. Then find the difference between the amount paid, $1,825, and the amount owed: $1,825 - $1,353 = $472.