Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A Single Fathers Tax Situation A SINGLE FATHERS TAX SITUATION Ever since his wifes death, Eric Stanford has faced difficult personal and financial circumstances. His

A Single Fathers Tax Situation

A SINGLE FATHERS TAX SITUATION Ever since his wifes death, Eric Stanford has faced difficult personal and financial circumstances. His job provides him with a fairly good income but keeps him away from his daugh- ters, ages 8 and 10, nearly 20 days a month. This requires him to use in-home child care services that consume a major por- tion of his income. Since the Stanfords live in a small apart- ment, this arrangement has been very inconvenient. Due to the costs of caring for his children, Eric has only a minimal amount withheld from his salary for federal income taxes. Thus more money is available during the year, but for the last few years he has had to make a payment in April another financial burden. Although Eric has created an investment fund for his daugh- ters college education and for his retirement, he has not sought to select investments that offer tax benefits. Over- all, he needs to look at several aspects of his tax planning activities to find strategies that will best serve his current and future financial needs. Eric has assembled the following information for the current tax year: Earnings from wages, $71,604 Interest earned on savings, $50 IRA deduction, $3,000 Checking account interest, $45 Three exemptions at $3,950 each Current standard deduction for filing status, $9100 Amount withheld for federal income tax, $4825 Tax credit for child care, $1200

child tax credit $1000

Filing status: head of household

1- Calculate the following

a. What is Erics taxable income?

b. What is his total tax liability? What is his average tax rate?

c. Based on his withholding, will Eric receive a refund or owe additional tax? What is the amount?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Guidelines For Auditing Process Safety Management Systems

Authors: CCPS (Center For Chemical Process Safety)

2nd Edition

0470282355, 978-0470282359

More Books

Students also viewed these Accounting questions