Question
John Jones is unmarried with no dependents. During the year he sold common stock in the following companies: John carried over a long-term capital loss of $3,500 from 2011. His taxable w3geswere $65,993 in 2012. His employer with held S8, 825 for federal taxes. John's only other items of gross income during the year were$756 of bank interest and $450 of state bond interest. Although he is an active participants his employer's 401K plan, in November he contributed $2,500 to his traditional IRA. Determine John's tax owed or tax refund for 2012
Explanation / Answer
in 2012 he made 1180 - 373 + 5274 = $6081. He carried over 3500 in losses. So capital gains in 2012 is 2581 and 756 + 450 in interest - 2500 contribution => hence the tax is 25% of 1287 = $321.75