Topic Test Answers

Leigh is the head of a household and earned $43,763 in taxable income this year. Over the course of the year, her employer withheld a total of $6322 for income tax. Based on the table below, what can Leigh expect when her taxes are due?

Mike has an adjusted gross income of $85,643. He claims two exemptions and can deduct $896 for state income tax, $2,145 for charitable donations, and $3,473 for medical expenses. If the standard deduction is $5,700 and exemptions are each worth $3,650, what is Mike’s total taxable income?

The Murphys’ gross annual family income is $120,500. Mr. Murphy referred to the graph shown below and calculated that his family will spend $28,920 on taxes this year. What is wrong with Mr. Murphy’s calculation?

Determine the total annual FICA tax for an annual salary of $63,250.

Doug is filing singly. His net taxable income is $80,575. Every week, $304 is withheld from his earnings for income tax. Based on the table below, what can Doug expect when his taxes are due?

0.05% of all tax returns filed electronically contain errors, but 20% of all tax returns filed manually contain errors. If 3.3 million tax returns are filed each way, how many more manually filed returns containing errors will there be than electronically filed returns containing errors?

Determine the total annual FICA tax for an annual salary of $110,330. Use $106,800 for maximum taxable earnings.

One possible solution to a diminishing Social Security payroll is to increase the Social Security tax by 1.89%. How would such an increase effect the tax on an annual salary of $54,000?

Ralph’s annual income is about $32,000. Based on his expenses illustrated in the graph below, roughly how much should Ralph expect to pay in taxes this year?

Kevin, while calculating his tax adjustments, notes that he can make adjustments of $3,435 for contributions to his retirement plan, $3,393 for business losses, and $1,128 for business expenses. If Kevin’s gross income is $45,942, what is his adjusted gross income?

Bob just turned 66 years old and is considering retirement. His average annual salary over the last 35 years is $50,760. Assuming that he will receive 42% of his average annual salary, what will be his annual Social Security benefit?

Sam is thinking of retiring from his job after many years of faithful service. During the last 35 years at his job, his annual salary averages to $37,991. Every month, his bills total $1,755. How much money would Sam need each month to supplement his monthly Social Security benefit (assuming his annual benefit is 42% of his salary average) and still be able to pay his bills?

Mauro just won $1,000,000 from the lottery! Despite his excitement in winning a tremendous amount of money, his brother (who is an accountant) warns him not to spend it all at once and hands him this tax rate schedule for single taxpayers. Taxable Income Federal Tax $0 - $7,825 10% of amount $7,825.01 - $31,850 $725.50 plus 15% of amount over $7,825 $31,850.01 - $77,100 $4,386.25 plus 25% of amount over $31,850 $77,100.01 - $160,850 $15,698.75 plus 28% of amount over $77,100 $160,850.01 - $349,700 $39,148.75 plus 33% of the amount over $160,850 $349,700.01 and up $101,469.25 plus 35% of amount over $349,700 Using this chart, a taxpayer who makes $58,000 annually (line 3) will have to pay $4,386.25 plus 25% of the difference of 58,000 and 31,850 or 4,386.25 + (0.25)(58,000-31,850) = $10,923.75. Before winning the lottery, Mauro’s annual income was $34,500. Use the chart to determine Mauro’s federal tax before winning the lottery and after winning the lottery. How much extra does he have to pay in federal taxes because he won the lottery?