Question

Jamie Lee Jackson, age 26, is in her last semester of college and is waiting for a graduation day that is just around the corner! It is the time of year again when Jamie Lee must file her annual federal income taxes. Last year, she received an increase in salary from the bakery, which brought her gross monthly earnings to $2,550, and she also opened up an IRA, to which she contributed $300. Her savings accounts earn 2 percent interest per year, and she also received an unexpected $1,000 gift from her great aunt. Jamie was also lucky enough last year to win a raffle prize of $2,000, most of which was deposited into her regular savings account after paying off her credit card balance.

Answer 1

Answer:

Jamie's federal taxes are:

Gross income = $2,550 salary x 12 = $30,600

raffle prize = $2,000

earned interests = $125 + $75 = $200

IRA deductions = ($300)

student loan interests = 0

Adjusted gross income = $32,500

- standard deduction = ($12,200)

taxable income = $20,300

federal taxes = ($9,700 x 10%) + ($10,600 x 12%) = $970 + $1,272 = $2,242

social security = $20,300 x 6.2% = $1,258.60 ≈ $1,259

Medicare = $20,300 x 1.45% = $294.35 ≈ $294

Answer 2

Taxable Income is the amount of income which is to be taxed after the deduction made. The income generated by an individual is taxed at an standard state income tax rate. This tax is payable annually.

Computing Jamie Taxable Income :

Gross Income $30,600 [ $2,550 * 12]

Less  : IRA deduction $300

Raffle Prize $2,000

Interest earned $200

Adjusted Income $32,500

Less  : standard deduction $12,200

Taxable Income 20,300

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