CAFF 223 Ch 4 HW

Alys makes ​$450 per week. How much will be withheld from her weekly check total for Social Security​ & Medicare​ taxes- total FICA​ taxes? ​(Hint​: The Social Security tax rate is​ 6.20% and the Medicare tax rate is​ 1.45%.)

$34.43

Taxable income is calculated​ as:

All of the above are correct (gross adjusted income less the total exemptions; is equal to the adjusted gross income less the Standard Deduction; is equal to the adjusted gross income less the Itemized Deduction)

The difference between a tax deduction and a tax credit​ is:

a tax deduction reduces the amount of taxable​ income, while a tax credit directly reduces the amount of tax owed

Common types of tax credits​ include:

adoption credits and child credits

A standard deduction is:

fixed amount deducted from adjusted gross income to determine taxable income.

Adjusted gross income is determined by​ calculating:

gross income minus special adjustments such as contributions to traditional individual retirement accounts.

Nick and Nora are married and has three children in college. They have an adjusted gross income of $47,400. If the standard deduction is ​$12,600​, itemized deductions are ​$14,200​, and they get an exemption of ​$4,000 for each adult and each​ dependent, what is their taxable​ income?

$13,200

Brian makes ​$27,000 per year. How much can Brian expect to contribute to FICA taxes?

$2,065

Tracy is single, with all W-2 income, and had an adjusted gross income of ​$37,000. Tracy also has the following​ items: medical expenses $2,000 State income tax $1,850 Interest expense​ (first mortgage) $3,040 Interest expense​ (second mortgage) $1,200 Real estate tax $700 Interest expense—car loan $550 Interest expense—credit card $125 Gifts to charity $300 How much may Tracy claim as itemized​ deductions?

$7,090