Family B: $300,000 in Adjusted Gross Income
Family B consists of a husband and wife with three children, ages 6, 9, and 11. The federal adjusted gross income is $300,000, all from salary. Family B contributes $5,000 to the 529 savings plan for college, purchases school supplies and clothing during the tax-free weekend (amount spent = $800), purchases a service agreement (cost = $600) for a new refrigerator, and the five family members attend 2 Panthers games (ticket price = $150 each), 5 Hornets games (ticket price = 150 each), 1 concert (ticket price = $220 each), 4 movies (ticket price = $6 each), and one circus performance (ticket price = $80 each). The family files a joint return and itemizes its deductions.
| 2013 | 2015 | |
|---|---|---|
| Federal adjusted gross Income | 300,000 | 300,000 |
| Deduction for Contribution to saving fund for college (529 plan) | 5,000 | 0 |
| Deduction for small business income | 0 | 0 |
| North Carolina adjusted gross income | 295,000 | 300,000 |
| Itemized Deductions | 45,000 | 45,000 |
| N.C. personal exemption allowances | 10,000 | 0 |
| N. C. taxable income | 240,000 | 255,000 |
| N.C. income tax | 17,638 | 19,663 |
| Consumer use tax | 162 | 172.00 |
| Income Tax due | 17,800 | 14,835 |
| Credit for children (100 per child) | 0 | 0 |
| Credit for child and dependent care expenses | 0 | 0 |
| N.C. earned income tax credit | 0 | 0 |
| Credit for charitable contributions for non-itemizers | 0 | 0 |
| Net income tax due | 17,800 | 14,835 |
| Sales taxes | ||
| – Service agreement for refrigerator | 0 | 40.50 |
| – School supplies, clothing during tax free weekend | 0 | 54.00 |
| – Tickets for 2 Panthers games | 0 | 101.25 |
| – Tickets for 5 Hornets games | 0 | 253.13 |
| – Tickets for 1 concert | 0 | 74.25 |
| – Tickets for 4 movies | 0 | 8.10 |
| – Tickets for 1 circus performance | 0 | 27.00 |
| Total Taxes | 17,800 | 15,393.23 |
Thus, Family B will see a drop in its total taxes.
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