Problem 13-34 (LO. 4, 8)

Joyce, a single parent, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during 2022. She uses the standard deduction and files as a head of household.

Round all computations to the nearest dollar.

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Click to access Earned Income Credit and Phaseout Percentages Table and the Tax Rates Schedules.

a. Calculate the amount, if any, of Joyce's earned income credit. $fill in the blank 5103470ad072f92_1

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The earned income credit, which has been a part of the law for many years, consistently has been justified as a means of providing tax equity to the working poor. In addition, the credit has been designed to help offset regressive taxes that are a part of our tax system, such as the gasoline tax. Further, the credit is intended to encourage economically disadvantaged individuals to become contributing members of the workforce.

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b. During the year, Joyce is offered a new job that has greater future potential than her current job. If she accepts the job offer, her earnings for the year will be $39,000; however, she is afraid she will not qualify for the earned income credit. Determine the increase or decrease in Joyce's net cash flow if she accepts the new job. Since the child tax credit will be the same under either scenario, you can ignore it for purposes of this analysis. Use the Tax Rate Schedule when computing her income tax.

	Keeps Old Job			Takes New Job
Tax calculation:
Salary	$33,000			$39,000
Less: Standard deduction	fill in the blank 18d880fa3045fad_1			fill in the blank 18d880fa3045fad_2
Taxable income	$fill in the blank 18d880fa3045fad_3			$fill in the blank 18d880fa3045fad_4
Income tax	$fill in the blank 18d880fa3045fad_5			$fill in the blank 18d880fa3045fad_6
Less: Earned income credit	fill in the blank 18d880fa3045fad_7			fill in the blank 18d880fa3045fad_8
Net tax due or refund	$fill in the blank 18d880fa3045fad_9			$fill in the blank 18d880fa3045fad_10
After-tax cash flow:
Salary	$33,000			$39,000
Less: Net tax due or Add refund	fill in the blank 18d880fa3045fad_11			fill in the blank 18d880fa3045fad_12
After-tax cash flow	$fill in the blank 18d880fa3045fad_13			$fill in the blank 18d880fa3045fad_14
Net increasedecreaseincrease in cash flow if accept new job	$fill in the blank 18d880fa3045fad_16

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