Mary Watson is 24 years old and single, lives in an apartment, and has no dependents.
Last year she earned $45,000 as a sales assistant for Focused Business Analytics: $3,910
of her wages was withheld for federal income taxes. In addition, she had interest
income of $142. Estimate her taxable income, tax liability, and tax refund or tax owed.
Mary Watson is 24 years old and single, lives in an apartment, and has no dependents.
Last year she earned $45,000 as a sales assistant for Focused Business Analytics: $3,910
of her wages was withheld for federal income taxes. In addition, she had interest
income of $142. Estimate her taxable income, tax liability, and tax refund or tax owed.
Answer this Question
To estimate Mary Watson's taxable income, tax liability, and tax refund or tax owed, we need to take into account several factors.
1. Start with Mary's earned income: $45,000
2. Subtract any pre-tax deductions, such as contributions to a retirement plan or healthcare expenses. If Mary does not have any pre-tax deductions, we will move on to the next step.
3. Calculate Mary's adjusted gross income (AGI) by subtracting any above-the-line deductions. Since there's no information provided about these deductions, we will assume she has none, and her AGI remains the same as her earned income: $45,000.
4. Subtract the standard deduction for a single individual. For the tax year 2021, the standard deduction is $12,550. Therefore, Mary's taxable income becomes: $45,000 - $12,550 = $32,450.
5. Calculate Mary's federal income tax liability using the tax brackets for the tax year in question. However, tax brackets change annually, and the exact calculation depends on various factors, including any tax credits or exemptions. Since the tax brackets for the given year are not provided, we cannot provide an exact tax liability amount. You can refer to the IRS Tax Tables or use tax preparation software to calculate the precise amount.
Given the information provided, we cannot determine Mary's tax refund or tax owed amount without knowing her total federal income tax withheld throughout the year. However, we are told that $3,910 of her wages was withheld for federal income taxes. This withheld amount would typically be applied towards her total tax liability. To estimate the refund or tax owed, we subtract the withheld amount from the tax liability calculated in step 5.
If you have the exact amount of federal income tax withheld throughout the year, you can subtract it from the estimated tax liability to determine Mary's tax refund or tax owed.