Answer:
Tax = $5,445
Explanation:
Given
Salary = $80,000
Short-term capital loss = $2,000
Cash prize = $4,000
Personal and dependency exemptions = $4,000*7 = $28,000
Standard deductions = $11,900 (for surviving spouse in 2012)
Calculating AGI
AGI = Salary - Capital Loss + Cash Prize
AGI = $80,000 - $2,000 + $4,000
AGI = $82,000
Calculating Taxable Income
Taxable Income = AGI - Personal And Dependency Exemption - Standard Deductions
Taxable Income = $82,000 - $28,000 - $11,900
Taxable Income = $42,100
From The Federal Income Tax Brackets for 2012,
Charlotte falls with the 15% tax bracket.
There are 15% tax, so we calculate as follows:
10% of the first bracket is
$17,400 * 10% = $1,740
15% is the amount in the second bracket
15% of (42,100 - 17400) = 3,705
Tax = $3,705+ $1,740
Tax = $5,445
