Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Question
Chapter 3, Problem 4FPE
Summary Introduction
To determine: The amount of education credits or deductions.
A taxable income is termed to any person's or business' remuneration that is utilized to decide tax liability. The gross income or total income is utilized as the origin to ascertain the amount of taxes an individual or a business owes to the government for the regular tax period.
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Tom and Ashley have a daughter, Janice, who is 19-years-old and attending college as asophomore at a local public university. Her parents have the following expense with relations toher college: •$20,000 for annual college tuition •$500 in required fees for attending courses •$8,500 for room and board Using the above information, you have been asked to calculate their best option for an education deduction or tax credit. Tom and Ashley, make $115,000 per year. Among the three options for education tax benefit, show calculations for which one would be the best for them and what is the deduction/credit?
Bradley has two college-age children, Clint, a freshman (his first year in college) at State University, and Abigail, a junior at Northwest University (her third year of college). Both Clint and Abigail are full-time students. Bradley is in graduate school.
Clint’s expenses for the year are as follows: $3,200 tuition and $500 books and course materials.
Abigail’s expenses for the year are as follows: $7,200 tuition, $1,200 books and course materials, and $4,500 room and board.
Bradley paid $5,000 of tuition for graduate school and $600 for books.
Bradley is married, files a joint tax return, claims both children as dependents, and has a combined AGI with his wife of $139,000 for 2020. Bradley has determined that the available education credits are more beneficial than the available deductions.
Determine the following:
A. Clint:
Which credit should he take?
Total eligible expenses:
Show calculation of maximum credit allowed:
B. Abigail:
Which credit should she take?…
Mary Smith earned her four-year degree and is in her first year of consulting for a law firm. Her monthly gross income is $4,155.00. She has the following taken out of her gross income: Social Security, Medicare, State Disability Insurance of 1%, State Withholding Tax of 2.64%, and Federal Withholding Tax using the percentage method. She Federal Withholding Tax. She also makes a $15.00 contribution to American Society for the Prevention of Cruelty to Animals and a $50.00 contribution to the Salvation Army.
a. How much are Mary’s FICA taxes?
b. How much is her State Disability Insurance?
c. How much is her State Withholding Tax?
d. How much is her Federal Withholding Tax?
e. What is Mary’s monthly net earnings?
Chapter 3 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Ch. 3 - Discuss the basic principles of income taxes and...Ch. 3 - Prob. 2LOCh. 3 - Prob. 3LOCh. 3 - Explain who needs to pay estimated taxes, when to...Ch. 3 - Know where to get help with your taxes and how...Ch. 3 - Implement an effective tax planning strategy.Ch. 3 - Calculating marginal tax rates. Lacey Hansen is...Ch. 3 - Estimating taxable income, tax liability, and...Ch. 3 - Calculating taxes on security transactions. If...Ch. 3 - Prob. 4FPE
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- How much taxable income should each of the following taxpayers report? a. Kimo builds custom surfboards. During the current year, his total revenues are 90,000, and he incurs 30,000 in expenses. Included in the 30,000 is a 10,000 payment to Kimos five-year-old son for services as an assistant. b. Manu gives hula lessons at a local bar. During the current year, she receives 9,000 in salary and 8,000 in tips. In addition, she engages in illegal behavior, for which she receives 10,000.arrow_forwardWill is a freshman at Florida State University where his tuition is $4,000. Sydney, his older sister, is a junior at the University of Georgia, where tuition is $25,000. What is the maximum tax credit Will and Sydney's parents can take? $2,000 $3,800 $3,650 $5,000arrow_forward1.Kevone is single and works for a local tech firm. He earned $87,000 last year in taxable wages, had $850 in interest on his savings. He contributed $3500 to an IRA. For deductions, he paid $8500 in real estate taxes, paid $2000 in sales taxes, paid $1500 for memberships in professional organizations, and made a $1000 gift to charity. He is eligible for $4000 in various tax credits. (Use the table below for marginal tax rates, standard deductions and exemptions.) Tax Rate Single up to $9325 up to $37,950 up to $91,900 up to $191,650 up to $416,700 up to $418,400 above $418,400 $6350 10% 15% 25% 28% 33% 35% 39.6% Standard deduction Exemption $4050 (per person) Married Filing Jointly up to $18,650 up to $75,900 up to $153,100 up to $233,350 up to $416,700 up to $470,700 above $470,700 $12,700 (b) What is Kevone's AGI? $4050 (a) What is Kevone's gross income? Married Filing Separately up to $9325 up to $37,950 up to $76,550 up to $116,675 up to $208,350 up to $235,350 above $235,350…arrow_forward
- Frank goes to Clemson University and pays $30,000 in tuition. He works and pays for his schooling. His AGI is $42,000. What is the amount of his American Opportunity Creditarrow_forwardJosh is a MFJ taxpayer and decides to return to school to get a graduate degree at night school while still working his full-time job. He is able to take class part time. Josh and his husband have an AĞI of $124,000, his tuition costs were $15,000, and his books are $1,500. Josh already attended four years of college and used the American Opportunity Tax Credit all four years. How much of a LTL tax credit is he eligible to take in 2020? Group of answer choices $1,500 $2,000 $1,000 None of these amounts.arrow_forwardSarah is a cash-method, calendar-year taxpayer, and she is considering making the following cash payments related to her business. Calculate the after-tax cost of each payment assuming she has a 37 percent marginal tax rate. $2,000 payment for next year’s property taxes on her place of business. $800 to reimburse the cost of meals at restaurants incurred by employees while traveling for the business. $1,200 for football tickets to entertain out-of-town clients during contract negotiations. $500 contribution to the mayor’s reelection campaign.arrow_forward
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