Nathaniel Sterling is a single aerospace engineer living in Huntsville, Alabama, who earns a substantial salary from a defense contractor. He also operates a side consulting business generating self-employment income, holds a brokerage account with dividend-paying stocks and a capital gain from selling shares, and pays significant mortgage interest and property taxes on his home, supporting an itemized deduction strategy.
Correct Answers
A G I
$378,450.00
gross Income
$392,850.00
tax Liability
$85,452.25
taxable Income
$337,250.00
refund Or Due Amount
$28,722.25
refund Or Due Direction
Balance Due
Step-by-Step Solution
TAX FORMULA — Nathaniel Sterling (SINGLE) GROSS INCOME Wages: $345,900.00 Interest Income: $3,700.00 Ordinary Dividends: $4,950.00 Business Income: $24,800.00 Capital Gain: $13,500.00 = Gross Income: $392,850.00 − Above-Line Deductions: $14,400.00 = AGI: $378,450.00 DEDUCTIONS Standard Deduction (single): $14,600.00 Itemized Deductions: $41,200.00 Deduction Used: $41,200.00 (itemized) = Taxable Income: $337,250.00 TAX CALCULATION Ordinary Taxable Income: $322,450.00 Ordinary Tax: $83,232.25 LTCG + Qualified Div: $14,800.00 LTCG Tax: $2,220.00 − Credits: $0.00 = Tax Liability: $85,452.25 − Taxes Withheld: $56,730.00 = Tax Due: $28,722.25