The following information is available for Bob and Brenda Horton, a married couple filing a joint return, for 2018. Both Bob and Brenda are age 32 and have no dependents.Salaries$200,000Interest income12,000Deductible IRA contributions11,000Itemized deductions25,600 Withholding31,000a.What is the amount of their gross income?b.What is the amount of their adjusted gross income?c.What is the amount of their taxable income?d.What is the amount of their tax liability (gross tax), rounded to the nearest dollar?e.What is the amount of their tax due or (refund due)?
What will be an ideal response?
| Hortons |
| Salary | $200,000 |
| Interest | 12,000 |
| Gross Income | $212,000 | a. |
| Minus: IRA Contributions | 11,000 |
| Adjusted gross income | $201,000 | b. |
| Minus: Itemized deductions | ( 25,600) |
| Taxable Income | $175,400 | c. |
| Tax liability (using Rate Schedule) * | $30,675 d. |
| Minus: Withholding | - 31,000 |
| Tax due (refund) | ( $ 325) | e. |
| *$28,179 + [.24 (175,400 - 165,000)] |
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