Pauline is a single mother working as a consultant in an IT company. She must file the 2021 tax return,
for which, the following information is available:
- Due to her professionalism and ability to deliver results, she has managed to earn an income
from her job in the amount of $95.000 including bonuses.
- As the job requires some traveling, she was provided a really comfortable company car that
could be estimated at $40.000 or $8.000 per year.
- Since a friend of hers needed to build a website for his furniture shop, she built one for him in
exchange for a state of the art sofa of around $4.500 in value, which she is unsure if she should
recognize as revenue, as expense or none of them.
- She owns a bunch of municipal bonds hence received a total coupon of $350.
- Also, her investment in another start-up distributed for the first time a dividend of $1.000 and
Dividend in Stock of $4.000. None of them were taxed in the source according to local law.
- On the other hand, she paid a total Mortgage of $12.000 this year, of which $4.000 were
interest expense. The ceiling for the deduction of these expenses is 3% of AGI in her country.
- She also is a regular donator in an International Charity Organization that is recognized by the
government where this year she donated $6.000
- Finally, her husband paid at year end the obligatory alimony payments as per divorce
settlement, summing to $6.000.
Please answer the following questions in a clear, short and concise manner:
1. What tax bracket does Pauline belong to (Tax brackets and categories below)?
2. Take the voices above in detail and briefly explain their treatment.
3. What is the Annual Gross Income of Pauline and why did you include the voices?
4. What is the Taxable Income of Pauline and why?
5. What is the yearly tax due (show calculations)?
Married Filing Seperately
0 - $13.000 0%
$13.000 - $40.000 14%
$40.000 - $75.000 22%
Over $75.000 35%
Single
0 - $10.000 0%
$10.000 - $35.000 15%
$35.000 - $60.000 25%
Over $60.000 35%
Single with chil(d)/(d)ependant
0 - $15.000 0%
$15.000 - $45.000 15%
$45.000 - $90.000 20%
Over $90.000 30