A) Mr. and Mrs. T have two young children, and file a joint return. They have...

A) Mr. and Mrs. T have two young children, and file a joint return. They have salary income of $67,000, and interest income of $400. Their itemized deductions total $8,750, and their federal income tax withheld was $2,170. Mrs. T received a cash gift of $20,000 from her aunt during the year.

Compute their refund or balance due (the year is 2018). Show your calculations.

B) Mr. and Mrs. V have three children, and file a joint return. They have no itemized deductions. What is the maximum income they can earn and have a tax liability of zero? Show your calculations.

Solutions

Expert Solution

Hey there!!

Let me help you calculate the tax liabilty of this Married couple filing jointly.

Refer the below stated computation and working notes explaining the amount considered.

Question A

Computation of Tax Liabilty in case of Jointly filed Income

	Salary Income	$67,000
	Interest Income	$400
	Cash Gift	$0	( Since tax is owed by the person who gives the gift and not the recepient)
		$67,400
Less	Standard Deduction	-$24,000	( Taking standard deduction of $24000 (As per Federal tax rules 2018) for jointly filed income is beneficial instead of itemised decution of 8750)
	Taxable Income	$43,400

Now, let us calculate tax liabilty, The slab rates are taken as per Federal tax rules 2018,.

	Tax Liability
	Upto 19,050	10%	$1,905
	Upto 77400	12%	$2,922	(43400-19050) = 24350*12%
	Total Tax Liability		$4,827
Less	Child Credit		-$4,000	( 2000$ per child as per Federal tax rules 2018 )
	Net Tax Liability		$827
Less	Tax Withheld		$2,170
	Net Tax Refundable		$1,343

Question B

The maximum income that Mr and Mrs can jointly earn so that there tax liability is Zero is 54,884.

As per IRS, 2018...If the assessee is married and filing jointly and has 3 or more dependent childern, he can claim this Earned Income Tax Credit. To claim the same, the joint income should not exceed $54884.

Also, the assesse can claim refund max amt of which is $6431 with 3 or more qualifying children.

I hope the above solution is clear to you now. Do let me know in case of any concerns.

All the best !!

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Mr. and Mrs. Z, both in their late 30s, file a joint tax return. They have...

Mr. and Mrs. Z, both in their late 30s, file a joint tax return. They have one dependent child who is age 5. Mr. Z is an employee with wages = $100,000. Federal tax withholding from his paycheck = $16,000. Their itemized deductions = $30,000. Any preferential tax rate = 0%. Allowable adjustment for retirement account = $5,000. Mrs. Z runs a part-time business that she operates as a sole proprietor. This year’s information is as follows: Revenue $30,000, Cost...

Mr. and Mrs. HenryHenry file a joint return and have taxable income of $ 380,000 without...

Mr. and Mrs. HenryHenry file a joint return and have taxable income of $ 380,000 without considering the following independent fact situations. a. They have a STCG of $ 31,000 and a LTCL of $ 20,000 b. They have a LTCG of $24,000 due to the sale of a collectible and a LTCG of $12,500 due to the sale of General Motors stock. c. Same as Part b except they also have a STCL of $4,500. Requirement Determine the increase...

Mr. and Mrs. Sedlock file a joint return and have a taxable income of $370,000 without...

Mr. and Mrs. Sedlock file a joint return and have a taxable income of $370,000 without considering the following information below. Determine the increase in their tax liability for the following independent fact situations. a. They have a STCG of $20,000 and a LTCL of $12,000. b. They have a LTCG of $30,000 due to the sale of a collectible and a LTCG of $9,000 due to the sale of General Motors stock. c. Same as part b except they...

Mr. and Mrs. Daniels, age 67 and 52, file a joint tax return. They have itemized...

Mr. and Mrs. Daniels, age 67 and 52, file a joint tax return. They have itemized deductions of $25,000. They have the following information for 2019: Salaries 122,000 Interest income 6,000 Allowable adjustments 15,000 Capital gain eligible for 15% rate 3,000 Federal tax withholding from salaries 10,000 Compute their AGI, taxable income, tax liability, and federal tax refund or amount due

Mr. and Mrs. Daniels, age 67 and 52, file a joint tax return. They have itemized...

Barb and Barney are married and file a joint return. They have two children, Lulu and...

Barb and Barney are married and file a joint return. They have two children, Lulu and Zoe, that live at home and whom they fully support. Lulu is 9 and Zoe is 13 years old. In order for Barb and Barney to both work, they pay care providers to take care of Lulu and Zoe after school. The total care cost for the year were: Lulu $4,800, and Zoe $3,800. During the year Barb earned salary of $24,500 and Barney...

Kyle and Tess Water are married, file a joint return, and have two dependent children in...

Kyle and Tess Water are married, file a joint return, and have two dependent children in college, Luke and Taylor. Luke attends a State University in a neighboring state, and Taylor attends a State University in their home state. Neither receives any type of financial assistance. The Water modified AGI in 2017 is $119,000. The children's classifications and expenses are as follows: Spring Semester (paid in January 2017) (paid in July 2017) Luke: Senior Master's candidate Tuition $7,400 $8,200 Laboratory...

Matt and Carrie are married, have two children, and file a joint return. Their daughter Katie...

Matt and Carrie are married, have two children, and file a joint return. Their daughter Katie is 19 years old and is a full-time student at State University. During 2017, she completed her freshman year and one semester as a sophomore. Katie’s expenses while she was away at school during the year were as follows: Use Tax Rate Schedule for reference. Tuition $ 5,000 Class fees 300 Books 500 Room and board 4,500 Katie received a half-tuition scholarship that...

1) Tony and Lisa are married and file a joint return. They have two children, ages...

1) Tony and Lisa are married and file a joint return. They have two children, ages 2 and 4. Their combined AGI is $86,300. Tony's earned income is $50,000; Lisa's is $36,300. They incur $6,200 in child care expenses ($3100 per child) to enable them to be employed during the current year. Their child and dependent care credit is $6,200. $1,240. $1,200. $6,000. 2) Connie has AGI of $90,000 and owns rental property generating a $27,000 loss. She actively manages...

Dan and Cheryl are married, file a joint return, and have no children. Dan is a...

Dan and Cheryl are married, file a joint return, and have no children. Dan is a pharmaceutical salesman and Cheryl is a nurse at a local hospital. Dan's SSN is 400-20-1000 and Cheryl's SSN is 200-40-8000 and they reside at 2033 Palmetto Drive, Nashville, TN 28034. Dan is paid according to commissions from sales; however, his compensation is subject to withholding of income and payroll taxes. He also maintains an office in his home as the pharmaceutical company does not...

Subjects