Herbert Ashford is a self-employed licensed surveyor based in Boise, Idaho, who earned wages from a part-time position with a regional engineering firm while also running his own land surveying consulting practice. He received interest from a savings account, ordinary and qualified dividends from a taxable brokerage account, and realized a capital gain from selling appreciated stock held for more than one year. His above-the-line deductions include the deductible portion of self-employment tax and contributions to a SEP-IRA, and his itemized deductions consist primarily of mortgage interest, state and local taxes (capped at $10,000), and charitable contributions.
Correct Answers
A G I
$79,950.00
gross Income
$93,250.00
tax Liability
$7,379.50
taxable Income
$60,150.00
refund Or Due Amount
$3,100.50
refund Or Due Direction
Refund
Step-by-Step Solution
TAX FORMULA — Herbert Ashford (SINGLE) GROSS INCOME Wages: $58,200.00 Interest Income: $2,300.00 Ordinary Dividends: $3,250.00 Business Income: $18,000.00 Capital Gain: $11,500.00 = Gross Income: $93,250.00 − Above-Line Deductions: $13,300.00 = AGI: $79,950.00 DEDUCTIONS Standard Deduction (single): $14,600.00 Itemized Deductions: $19,800.00 Deduction Used: $19,800.00 (itemized) = Taxable Income: $60,150.00 TAX CALCULATION Ordinary Taxable Income: $47,200.00 Ordinary Tax: $5,437.00 LTCG + Qualified Div: $12,950.00 LTCG Tax: $1,942.50 − Credits: $0.00 = Tax Liability: $7,379.50 − Taxes Withheld: $10,480.00 = Refund: $3,100.50