Question

Can someone please show me how to solve these tax-problems. Thank you. (the answers selected are incorrect) correct answers are 5,616 for question 3 and 1200 for question 4

For the year 2017, Mary Larson, who is divorced, reported interest income of $100 and wages of $15,000. She maintains a household for herself and her two five-year-old twins who qualify as her dependents. What is the maximum earned income credit available to her for 2017? • $6,000 O $5,616 O $0 $3,400 Question 4 6 pts Mr. and Mrs. Cruz file a joint return and claim exemptions for two children, ages 2 and 4. Mr. Cruz had wages of $24,500 during the year, while Mrs. Cruz was a full-time student from January through August. The Cruzes paid Playtime Nursery $600 per month for the entire year for the care of the children. The Cruzes' maximum allowable credit for child care is: $600 • 5792 $1,800 O $1.200

Answer 1

3 Total amount of income = Interest income + Wages = $100+ $15,000 = $15.100 Mary Larson has two dependent childrens and filing return single, hence maximum income limit for year 2017 = $45,007. Since total income of Mary Larson is lower than maximum income limit, maximum amount of credit available = $5,616. Ans: $5,616 4 Total income of Mr. and Mrs. Cruz = $24,500 Monthly payment = $600 Total payment for care of the children = $600 Per month * 12 Months = $7,200 Since total income is $24,500 and filing jointly and have 2 dependent childrens, maximum allowable credit for childrens is as follows: 1) If your income is below $15,000. you will qualify for the full 35%. 2) The percentage falls by 1% for every additional $2,000 of income until it reaches 20%. 3) The 20%-35% is taken from up to $3,000 of expenses paid for one Qualifying Person, or from up to $6,000 of expenses paid for two or more Qualifying Persons As per above 3rd point, maximum amount of expenses we should consider is $6,000. However since income is more than $15,000, we should compute percentage for credit. As per 2nd point, percentage credit on expenses = 30% (Since for every $2.000 extra income percentage reduced by 1%). Term for student = Jan to August = 8 Months Maximum allowable expenses for credit = $6,000 Maximum allowable credit for Child care = $6,000 * 30% * 8/12 = $1,200 Ans : $1.200