Question

Mary (age 40) is single and provides more than 50% of the support of Tammy (a family friend), Jen (a niece, age 18) and John (a nephew, age 18). Both Tammy and Jen live with Mary, but John (a French citizen) lives in Canada. Mary earns a salary of $90,000, contributes $5,000 to a traditional IRA, and receives sales proceeds of $15,000 for an RV that cost $65,000 and was used for vacations. She has $8,200 in itemized deductions. Compute Mary’s 2020 tax liability including the child and dependent tax credit if applicable.

United States Tax Code of 2020 in use here. Thank you.

Answer 1

1. 
   As tax Rules salary per year 2020 RV is personal Asset, no loss on sale of Personal asset is deductible Marry is eligible for filling as Head of Household" S. Nol. Particulars Explanation Amount (1 Gross Income $90,000 1(2) for Adjusted Gross IRA deduction $ 5000 Income (AGI) deduction (3) Adjusted Gross Income (1)-(2) $ 85,000 Standard deduction standard deduction for Head of household $ 18650 filling for 2020 Is Itemized deduction linen in question $8200 (6) Greater of standard Greater of 3(4) or (5) Ideduction of Itemized $ 18650 deduction Taxable Income (3) - (6) $66,350 85000 - 18650 (2) Income Tax Liability Refer working $ 8945 Note $1000 Marry's dependent only 2 out 3 Tax Credit dependent qualify for dependent credit $500 x2
   
   2020 Tax Rates working Note: per Massy's Taxable Income Tax liability for Marry as Schedules. income $ 66,350 by thead of Household Taxe rates schedules for 2020 Under Taxable Income between $53701- & 85,500 i e. $6162 + 22% of the amount over $ 53700 = $ 6162 + 0.22 xC $66350 - $ 53700) $6162 + 0.22x612650 Tax liability = $8945