Ralph and Josee have adjusted gross income of $53,000. They have itemized deductions of $18,000 and incurred $2,000 in college expenses for their daughter who is a freshman at a local community college
They file jointly and have three exemptions at $4,000 each. Compute their tax liability for the current year.
A) $227
B) $1,170
C) $255
D) $2,780
Answer: A
Explanation: A)
AGI $53,000
Less itemized deductions $18,000
Less exemptions (3) $11,400
Taxable income $23,600
Exhibit 4.6, Panel B - $1,740 + 15%($23,600 - $17,400) = $2,670 - $2,000 (college expense credit) = $670
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