Question

Hello my name is Pete. I posted my previous question in error by forgetting to mention that I am located in New York State and am required to go by those rules and regulations.

Erica Swanson (SSN 376-38-4930), age 46, is a single parent with three children:

Her biological son, Sean Swanson (age 19) is a part-time college student who works fulltime as a landscaper

Her biological daughter, Brooklyn Swanson (age 14)

Her adopted daughter, Sydney Swanson (age 12)

Although Erica receives child support from her ex-husband, she provides more than half of the support of all three children. Although her ex-husband does spend time with the children, Erica is their custodial parent; all three children have lived with Erica for the whole year. Erica works as an office manager. Her W-2 from 2018 shows the following information:

Gross wages: $39,500

Social security tax withheld: $2,449

Medicare tax withheld: $573

Federal income tax withheld: $3,950

State tax withheld: $819

401(k) contribution: $5,500

In addition, she accrued $950 of taxable interest during the year. In order to work, Erica has made arrangements for her neighbor, Robin Murphy, to watch the girls after school and during the summer. During the year, Erica paid Robin a total of $5,200 for child care expenses for the two girls (divided evenly). Sean took a couple of classes at the local community college during the year. Erica paid $1,200 for his tuition, fees, and books. His full-time work schedule prohibited him from attending at least half-time. Erica has satisfied the full-year coverage health insurance requirement under the ACA.

Which filing status should Erica use?

What is the amount of wages that Erica should report on Form 1040?

What is the amount of taxable interest that Erica should report on Form 1040?

What is the amount of Erica's AGI?

How many qualifying dependents does Erica have?

What is the amount of Erica's basic standard deduction?

What is the amount of Erica's additional standard deduction?

How much taxable income does Erica have?

What is Erica's tax liability?

Child and dependent care credit

Amount of qualifying expenses eligible for credit?

Applicable percentage (from table)

Amount of credit?

Education credits

Which education credit does Erica qualify for?

Amount of credit?

Child tax credit (non-refundable)

Number of qualifying children?

Amount of initial credit?

Amount of non-refundable credit?

Additional child tax credit

Amount remaining after non-refundable credit is taken?

IRS limit for refundable portion?

15% of earned income above $2,500?

Allowable refundable child tax credit?

Earned income credit

Does Erica qualify for the earned income credit?

If so, what is the amount of her credit?

Additional amount due (or refund amount)

Will Erica be getting a refund, or does she owe additional tax?

What is the amount?

Answer 1

1	Which filing status should Erica use	Single
2	Amount of wages	$34,000	(39500-5500)
3	Taxable interest	$950
4	Amount of AGI	$34,950
5	Qualifying dependents	2
6	Basic standard deduction	$12,000
7	Additional standard deduction	$0
8	Taxable income	$22,950
9	Tax liability	$2,563.88	(952.50+1610.88)
	Child and Dependent Care
	Amount of qualifying expense eligible for credit	$2,600
	Applicable percentage	35%
	Amount of credit	$910
	Education Credits
	Education credit Erica qualify for	Lifetime learning credit
	Amount of credit	$1,200
	Child tax credit
	Number of Qualifying children	2
	Amount of initial credit	$4,000	($2000 x 2)
	Amount of non-refundable credit	$2,600	($4000-$1400)
	Additional child tax credit
	Amount remaining after non-refundable credit is taken	$1,400
	IRS limit for refundable portion	$1,400
	15% of earned income above $2500	4725
	Allowable refundable child tax credit	$1,400
	Earned income credit
	Does erica qualify for the earned income credit	Yes
	Amount of credit	$6,444
	Additional amount due
	Erica will be getting a refund	refund