Answer:
Smiths ($) Millers ($)
Salary (earned by one spouse) $30,000 $95,000
Taxable interest income $20 $1,000
Gross Income $30,020 $96,000
Less: Deductible IRA $0 $6,000
Contribution
Adjusted Gross Income (AGI) $30,020 $90,000
Less: Itemized Deductions $900 $26,400
Taxable Income $29,120 $63,600
Tax as per tax brackets $3,106 $7,244
Withholding $750 $8,500
Tax due or (refund due) $2,356 ($1,256)
Workings on Tax as per tax brackets
Smiths
($19,400 * 10%) + [($29,120 - $19,400) * 12%]
= $3,106
Millers
($19,400 * 10%) + [($63,600 - $19,400) * 12%]
= $7,244
