Answer the following Essential Question: Mary Blackburn is a single parent with two children, Amy and...

Answer the following Essential Question: Mary Blackburn is a single parent with two children, Amy and Micah. She receives $300 weekly from WIC, a government welfare assistance program. Mary also works at the local supermarket Supremo, "off-the-books," receiving cash of $350 weekly. She believes that she should not pay any taxes because its like "snitching on herself" and that the government already collects their fair share of taxes from the Rich. Do you agree with Mary? Does she have an obligation to report and pay taxes on the money she receives?

Expert Solution

Mary Blackburn is a single parent with two children, Amy and Michah.

Government doesn't differentiate the requirement to pay taxes based on the Social status of a person (rich or poor) but it depended that on earnings of the people.

As a person living in US, Mary Blackburn is liable to pay taxes as the annual income she earned has crossed the standard deduction of $18,000 (for single parent)

But she is eligible for certain deductions like Eligible Income Tax Resit (EITC), Child tax credit.

EITC maximum deduction is $5,828 (for 2 children and the earnings has not exceeded the upper limit of $46,703). It is also refundable

Child tax credit maximum deduction would be $4,000 ($2,000 per child), assuming the children are below 17 and are dependents. Refundable amount is limited to 1400 per child ($2,800 in total)

She has a liability to pay tax (without taking into account the credits available) so she has to report her income with the government (it is necessary even to claim any refund if exist)

Note: We are not asked to calculate the taxable amount of credit available

ekkarill92 answered 2 years ago

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