Jack, who is unmarried and maintains a home for two dependents, has $359,900 taxable income in the current year. Compute his tax liability before tax credits.

Question

BlackTom AI · Accepted Answer

We start by restating the problem: Jack is unmarried and supports two dependents, with a taxable income of $359,900 in the current year. We need to compute his tax liability before tax credits.

First, determine the filing status that applies. Since Jack is unmarried and has dependents, the likely filing status is Head of Household (HOH), which offers more favorable tax brackets than single filers when there are dependents.

Next, recall the 2023 HOH tax brackets (amounts are cumulative through each bracket):
- 10% on the first up to $15,700
- 12% on from $15,701 to $59,850
- 22% on from $59,851 to $95,350
- 24% on from $95,351 to $182,100
- 32% on from $182,101 to $231,250
- 35% on from $231,251 to $578,125
- 37% above $578,125

Now allocate the $359,900 taxable income across these brackets and compute tax for each portion:
- 10% on the first $15,700 = $1,570
- 12% on the next $44,150 ($59,850 − $15,700) = $5,298
- 22% on the next $35,500 ($95,350 − $59,850) = $7,810
- 24% on the next $86,750 ($182,100 − $95,350) = $20,820
- 32% on the next $49,150 ($231,250 − $182,100) = $15,728
- 35% on the remaining amount above $231,250 up to $359,900: $359,900 − $231,250 = $128,650; 35% of $128,650 = $45,027.50

Add these components to get the total tax before credits:
- Start with $1,570
- Add $5,298 → $6,868
- Add $7,810 → $14,678
- Add $20,820 → $35,498
- Add $15,728 → $51,226
- Add $45,027.50 → $96,253.50

Rounding to the nearest dollar (as tax amounts are typically reported), this is about $96,254.

A few notes about potential uncertainties:
- If Jack instead used the Single filing status, the bracket thresholds would differ and the tax would come out different; however, given two dependents and being unmarried, HOH is the more appropriate filing status unless he elects other considerations.
- The problem states “taxable income,” which means income already reduced by deductions and exemptions; we are applying the HOH brackets directly to that amount, which is the standard approach for computing tax liability before any credits.
- If there were additional taxes (self-employment tax, NIIT, etc.) or alternative minimum tax considerations, those would alter the liability, but the problem specifies only regular income tax liability before credits.

In summary, applying HOH 2023 brackets to $359,900 yields a total tax around $96,254 before credits, matching the commonly cited rounded result for this scenario.

SP25-BL-BUS-A327-1377 Exam 1 Practice

Jack, who is unmarried and maintains a home for two dependents, has $359,900 taxable income in the current year. Compute his tax liability before tax credits.

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