Question

Jason's job is going great, and this past year he decided to work part-time so that he could go to school full- time for his master's degree. Jason went to a highly ranked school, and tuition and fees were $15,200 for the year. He paid for his tuition and fees using a combination of savings, current income, scholarship, employer provided tuition assistance, and student loans. It is the end of the year, and Jason is filing his tax return. His total income and benefits are as follows: Wages $28,400 (as reported on his W-2) Employer-provided tuition assistance $4,880 Scholarship $2,020 Student loan proceeds $4,880 In addition to tuition, Jason had the following expenditures: $100 Student loan interest $1,080 (as reported to Jason by his lender on Form 1098-E) Books $860 Rent $8,340 Federal income taxes withheld $4,000 (as reported on his W-2) It is now time for Jason to complete his tax return. Jason is single and is 26 years old.

Answer 1

Ans 1 Jason's filing status is "Single" and standard deduction amount is $12,200.

Ans 2

Income Items	Inclusion/Exclusion	Amount
1. Wages.	Included in gross income	$ 28,400
2. Employer-provided tuition assistance.	Excluded in gross income	$ 4,880
3. Scholarship.	Excluded in gross income	$ 2,020
4. Student loan proceeds	Included in gross income	$ 4,880
	Total	$ 40,180

So, Total gross income is $ 28,400 + $ 4,880= $ 33,280

Ans 3 Jason is eligible to claim "Lifetime learning tax credit".

Ans 4

Expenses	Deduction	Amount of Deduction
1. Student loan interest paid.	can claim deduction	$ 1,080
2. Books.	can claim deduction	$ 860
3. Rent	cannot claim deduction	$ 8,340
	Total	$ 10,280

So, Total Deduction is $ 1,080 + $ 860= $ 1,940

Ans 5 Jason's tax liability using form 1040

Gross Total Income= Total Gross Income - Total Deduction

=$ 33,280 - $ 1,940

=$ 31,340

Here, Federal income taxes withheld $ 4,000. So. total tax liability is

=Total Gross Income - Standard Deduction

=$ 31,340 - $ 12,200

= $ 19,140

Therefor, Total Tax Liability as per the tax bracket @ 12% for $ 19,140 is $ 2,296.8 i.e., $ 2,300.

So, Total tax liability is $ 2,300 and federal income taxes withheld is $ 4,000.

Hence, Total Tax Refund = Advanced Tax - Total tax liability

=$ 4,000- $ 2,300

= $ 1, 700

So, At the time of filing tax return the jason is single and 26 year old. Therefore, he is come under tax bracket of 12%.