Question

Problem 3-41 (LO. 5) 1. Indicate whether the following individuals are "Required" (based on income) or "Not required" to file a tax return for 2020. Click here to access the standard deduction tables to use. Required / Not Required a. b. c. Patricia, age 19, is a self-employed single individual with gross income of $5,200 from an unincorporated business. Business expenses amounted to $4,900. Mike is single and is 67 years old. His gross income from wages was $12,750. Ronald is a dependent child under age 19 who received $6,800 in wages from a part-time job. Sam is married and files a joint return with his spouse, Lana. Both Sam and Lana are 67 years old. Their combined gross income was $24,250. Quinn, age 20, is a full-time college student who is claimed as a dependent by his parents. For 2020, Quinn has taxable interest and dividends of $2,500. d. e. 2. Even though an individual has gross income below the filing level amounts and therefore does not owe any tax, he or she must file a return to obtain which of the following? Select "Yes or No" whichever is applicable. Benefits from refundable tax credits Benefits from nonrefundable credits A tax refund of amounts withheld

Answer 1

1.)

PART (a) We will be providing with a detailed explanation to each point in every part. MINIMUM AGE REQUIREMENT: There is no minimum age requirement for self employed to file a return. MINIMUM INCOME REQUIREMENT: $400 for self employed. STANDARD DEDUCTION AVAILABLE: Patricia can avail the standard deduction available to the self employed. SINGLE: Since Patricia is a single, she can claim upto $12,200 as a standard deduction which is more than her gross income of $5,200. Patricia is not required to file a return. PART (b) MINIMUM INCOME REQUIREMENT: Minimum income required to file a return for a single person of age more than 65 years is $13,600. Since Mike has a gross income of $12,750, Mike is not required to file a return. PART(C) MINIMUM AGE REQUIREMENT FOR A DEPENDENT: The dependent must be under the age of 19 years. MINIMUM INCOME REQUIREMENT: $12,000 for earned income and $1050 for unearned income. EARNED INCOME: It is the income that a person earns by working for a job or self employment. UNEARNED INCOME: It is a passive income from interests, investments etc. Since Ronald has earned $6,800 from a part- time job, Ronald is not required to file a return. PART (d) MINIMUM INCOME REQUIREMENT: Both Sam and Lara are above 65 years old and filing jointly. Minimum income required in this case to file a return is $26,600. Since their income $24,250 is under the exemption bracket, Sam is not required to file a return.

2.) YES

NO

YES