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Calculation of Tax Liabilties

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John and Joanna have $125,000 in combined salary and wages, $8,000 in dividend income, and $3,000 in interest income. What is their tax liability for 2007 if they are married filing jointly, have $35,000 in itemized deductions, and claim no dependency exemptions?

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Solution Preview

For your convenience, I have attached images of two pages from a 2007-1040 Federal Tax form, from which you can see that the tax liability for John and Joanna would amount to the sum of ...

Solution Summary

This posting contains a formatted MS Excel spreadsheet which illustrates how to calculate the tax liability from the impact of various financial transactions.