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In: Accounting

Earned Income Credit: For each of the following situations, compute the taxpayers’ 2019 earned income credit....

Earned Income Credit:

For each of the following situations, compute the taxpayers’ 2019 earned income credit. A. Patty and Ron Barnett file a joint return, claiming their two sons, ages 3 and 5, as dependents. The Barnett’s AGI is $14,400, which consists entirely of Ron’s wages. B. Joseph is a 25-year-old graduate student. His gross income consists of $5,000 of wages and $80 in interest from a savings account. Joseph files as single and claims no dependents. C. Suzanne and Vernon Zimmerman file a joint return, claiming their 6-year-old daughter as a dependent. The Zimmermans’ AGI consists of Vernon’s $26,375 in wages, and $400 in dividend income. D. Sarah files as head of household, claiming her 2-year-old son as a dependent. Sarah’s AGI consists of $18,000 in wages and $3,620 in interest income.

Solutions

Expert Solution

Answer:

A)

  • Earned income credit = $5828

​​​​​​​Explanation:

Barnett’s AGI = $14400

Most extreme earned income credit with two qualifying youngsters is $5828. Earned income credit in the event of married filing mutually with two qualifying kids starts with $19,030.

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B)

  • Earned income credit = $529

​​​​​​​Explanation:

Joseph AGI = $5080 ($ 5,000 + $ 80)

Most extreme earned income credit with no qualifying youngsters is $529. Earned income credit in the event of single with no qualifying kids starts with $8650.

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C)

  • Earned income credit = $3214

​​​​​​​​​​​​​​Explanation:

Zimmermans’ AGI = $26775 ($ 26,375 + $ 400)

Most extreme earned income credit with one qualifying youngsters is $3526. Earned income credit in the event of married filing mutually with one qualifying kids starts with $24820 and closes with $41094.

Calculation of Earned income credit :

Earned income credit

= $3526-(($26775-$24820)*15.98%)

= $3,526 - (($ 1,955)*15.98/100)

= $3,526 - $ 312.409

= $ 3,213.591

 $ 3,214 (approx)

=======================================================================
D)

  • Earned income credit = $ 0

​​​​​​​Explanation:

Investment income as far as interest income is over the constraint of $3600 in 2019 and in this way not qualified for earned income credit.Therefore, earned income credit is $0.

ekkarill92 answered 11 months ago
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