Problem 1. In 2011, Lisa and Fred, a married couple, have taxable income of $795,000. If they were to file separate tax returns, Lisa would have reported taxable income of $380,000 and Fred would have reported taxable income of $415,000.
What is the couple's marriage penalty or benefit?
Problem 2. Olga is married and files a joint tax return with her husband.
What amount of AMT exemption may she deduct under each of the following alternative circumstances? (Use 2011 exemption amounts.)
Her AMTI is $112,500
Her AMTI is $216,000.
Her AMTI is $535,000.
Problem 3. Rasheed works for Company A, earning $395,000 in salary during 2011.
Assuming he has no other sources of income, what amount of FICA tax will Rasheed pay for the year?
Problem 4. Kyle worked as a free-lance software engineer for the first three months of 2011. During that time, he earned $46,000 of self-employment income. On April 1, 2011, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc. From April through the end of the year, Kyle earned $87,000 in salary.
What amount of FICA taxes (self-employment and employment-related) does Kyle owe for the year?