Question

Required information [The following information applies to the questions displayed below.] Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy's employer withheld $11,000 of federal income taxes from Jeremy's paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $23,000 in itemized deductions. (Use the tax rate schedules.) a. Determine Jeremy's tax refund or taxes due. Description Amount $ 0 (1) Gross income (2) For AGI deductions (3) Adjusted gross income (4) Standard deduction (5) Itemized deductions (6) (7) Taxable income (8) Income tax liability (9) Child tax credit (10) Tax withholding $ 0

Answer 1

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Solution: a) 1 2 3 4 As per Tax year 2020 limit, answer will be different for different year: Answer are highlighted in yellow: Description Amount Gross Income (100000+6000) 106000 For AGI Deduction 0 Adjusted Gross Income 106000 Standard Deduction (per 2020 rule) $ 18,650 Itemized Deduction $ 23,000 Greater of Standard or itemized deduction $ 23,000 Taxable income (106000-83000) $ 83,000 Income tax liablity (6162)+(83000-53700)*22% $ 12,608 Childs (Child tax credit, per 2020 rule) $ 2,000 Tax Withholding $ 11,000 Tax Refund (Amount sign can be negative) $ -392 5 Less: 6 7 8 Less: 9 Less: 10 As per 2020, Child tax credit rule, Maximum credit per child is $2000. Will be phaseout by $50 per $1000 or proportion Increase in Modified income of $200000, in case of single and Head of household. Therefore, $ 2,000

) b) 1 2 3 4 5 6 7 8 Description Year 2020 Gross Income (100000+6000)+4000 110000 For AGI Deduction 0 Adjusted Gross Income 110000 Standard Deduction (per 2020 rule) $ 18,650 Itemized Deduction $ 23,000 Greater of Standard or itemized deduction $ 23,000 Taxable income (110000-23000) $ 87,000 Income tax liablity (6162)+(83000-53700)*22%] + (4000*15%) $ 13,208 Child tax credit (per 2020 rule) $ 2,000 Tax Withholding $ 11,000 Tax Due (Amount sign can be negative) $ 208 Less: Less: 9 Less: 10 c) Amount 106000 1 2 0 Description Gross Income (100000+6000) For AGI Deduction Adjusted Gross Income Standard Deduction (per 2020 rule) Itemized Deduction Greater of Standard or Itemized deduction Taxable income (106000-18650) Income tax liablity (13158)+(87350-85500)*24% Child tax credit (per 2020 rule) Tax Withholding Tax Due (Amount sign can be negative) 6 min 009 7 106000 $ 18,650 $ 7,000 $ 18,650 $ 87,350 $ 13,602 $ 2,000 $ 11,000 $ 602