Question

Use Worksheet 3.1, Use Worksheet 3.2. Henry Zhao graduated from college in 2014 and began work as a systems analyst in July 2014. He is preparing to file his income tax return for 2014 and has collected the following financial information for calendar year 2014:

Tuition, scholarships, and grants	$5,750
Scholarship, room, and board	1,850
Salary	30,250
Interest income	185
Deductible expenses, total	3,000
Income taxes withheld	2,600

EXHIBIT 3.3    Sample Tax Rate Schedules

Tax rates levied on personal income vary with the amount of reported taxable income and the taxpayer's filing status.

2014 Tax Rate Schedules Schedule X-If your filing status is Single If your taxable income is: The tax is: Over- But not over- of the amount over- 0 $9,075 _ _ _ _ _10% $0 9,075 36,900 $907.50 + 15% 9,075 36,900 89,350 5,081.25 + 25% 36,900 89,350 186,350 18,193.75 + 28% 89,350 186,350 405,100 45,353.75 + 33% 186,350 405,100 406,750 117,541.25 + 35% 405,100 406,750 _ _ _ _ _ 118,118.75 + 39.6% 406,750

1. Prepare Henry's 2014 tax return, using a $6,200 standard deduction, a personal exemption of $3,950, and the tax rates given in Exhibit 3.3. Which tax form should Henry use, and why?
2. 
   
3. Prepare Henry's 2014 tax return using the data in part a, along with the following information:
   

   IRA contribution	$5,000
   Cash dividends received	150

   
   Which tax form should he use in this case? Why?

Answer 1

a)

Tax form 1040EZ needs to be filed because Hentry has a taxable income less than $100,000 and does takes standard deduction instead of itemized deductions.

c)

In this case, Hentry should use the tax form 1040A: