Katherine Mitchell is a single, self-employed forensic accountant based in Denver, Colorado, who earns a substantial salary as a part-time contractor for a regional financial consulting firm in addition to running her own solo forensic accounting practice. She holds a diversified investment portfolio generating qualified dividends and long-term capital gains from the sale of appreciated index fund shares. Katherine pays significant mortgage interest and state/local taxes on her downtown condo, which drives her itemized deductions above the standard deduction threshold.
Correct Answers
A G I
$188,650.00
gross Income
$200,050.00
tax Liability
$29,627.50
taxable Income
$158,850.00
refund Or Due Amount
$16,077.50
refund Or Due Direction
Balance Due
Step-by-Step Solution
TAX FORMULA — Katherine Mitchell (SINGLE) GROSS INCOME Wages: $167,300.00 Interest Income: $4,200.00 Ordinary Dividends: $2,350.00 Business Income: $10,700.00 Capital Gain: $15,500.00 = Gross Income: $200,050.00 − Above-Line Deductions: $11,400.00 = AGI: $188,650.00 DEDUCTIONS Standard Deduction (single): $14,600.00 Itemized Deductions: $29,800.00 Deduction Used: $29,800.00 (itemized) = Taxable Income: $158,850.00 TAX CALCULATION Ordinary Taxable Income: $141,750.00 Ordinary Tax: $27,062.50 LTCG + Qualified Div: $17,100.00 LTCG Tax: $2,565.00 − Credits: $0.00 = Tax Liability: $29,627.50 − Taxes Withheld: $13,550.00 = Tax Due: $16,077.50