Question

Jeremy earned $100,800 in salary and $6,800 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 $26,200 in itemized deductions. (Use the tax rate schedules.) CARES Problem 4-29 Part-a (Algo) a. Determine Jeremy's tax refund or taxes due (assume Jeremy did not receive the recovery rebate in advance of filing his tax return). 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) Credits (10) Tax withholding $ 0
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Answer 1

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Solution: a) 1 2 3 4 5 6 As per Tax year 2020 limit, answer will be different for different year: Answer are highlighted in yellow: Description Amount Gross Income (100800+6800) 107600 For AGI Deduction 0 Adjusted Gross Income 107600 Standard Deduction (per 2020 rule) $ 18,650 Itemized Deduction $ 26,200 Greater of Standard or Itemized deduction $ 26,200 Taxable income (107600-26200) $ 81,400 Income tax liablity (6162)+(81400-53700)*22% $ 12,256 Childs (Child tax credit, per 2020 rule) $ 2,000 Tax Withholding $ 11,000 Tax Refund (Amount sign can be negative) $ -744 or $2,444 (744+1200+500) Less: 7 8 9 Less: 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 4 5 6 Description Year 2020 Gross Income (100800+6800)+7550 115150 For AGI Deduction ol Adjusted Gross Income 115150 Standard Deduction (per 2020 rule) $ 18,650 Itemized Deduction $ 26,200 Greater of Standard or itemized deduction $ 26,200 Taxable income (110000-23000) $ 88,950 Income tax liablity [(6162)+(81400-53700)*22%] + (4000*15%) $ 13,389 Child tax credit (per 2020 rule) $ 2,000 Tax Withholding $ 11,000 Tax Due (Amount sign can be negative) $ 389 Less: 7 8 9 10 Less: Less: