The brown family consists of married couple Charlie and Nina And their young son Luke. Nina is a software designer making $58,000 per year and Charlie is an office manager making $46,000 per year. Use the current tax information handout for deductions, credits, and tax rates in the section.

1.) Find the total income tax that Nina and Charlie would have to pay if they filed jointly and the total income tax theyd have to pay if they filed separately. Which should they choose?(assume Luke is a qualifying child where tax credits are concerned.)

2.) determine the total FICA taxes for Nina and Charlie.

Current Tax Information The following information is for the 2019 tax vear (that is, the taxes that were filed in 2020). AGI = adjusted gross income Income Taxes Standard Deduction: $12.200 for single taxpavers and married taxpavers filina separately $18,350 for heads of households (single but with dependents) $24.400 for married taxpavers filing jointly and surviving spouses o o Common Tax Credits (simplified): Child Tax Credit: $2000 per qualifying child if AGI is under $200,000 (or $400,000 if married filing iointlv): can only be claimed by one parent if filing separately Earned Income Tax Credit: If you have earned income through wages or self-employment: Credit of $6557 if you have 3 or more qualifying children and AGI is under $50,162 (or $55.952 if vou're married filing iointly) Credit of $5828 if you have 2 qualifying children and AGI is under $46,703 (or $52,493 if you're married filing jointly) Credit of $3526 if vou have 1 qualifving child and AGI is under $41.904 lor $46.884 if you're married filing jointly) Credit of $529 if you have no children and AGI is under $15,570 (or $21,370 if you're married filing jointly) NOTE: Married couples filing separately can't get this credit. American Opportunity Credit: Up to $2500 per student (for tuition, books, and fees) during the first four vears of college if AGI is under $80.000 (or $160.000 if married filing iointly). o O o . Tax credits and negative amount owed: Certain credits (including all the ones listed above) can reduce your tax owed to a negative number. For example, if vour computed tax was $1000 and vou were eligible for a $2000 credit. the government would owe you $1000. There are actually limitations on how much of each credit can be applied toward a negative tax owed. but to keep things simple. we'll ignore that here and assume the full credit can be cuhtracted FICA (Payroll) Taxes FICA taxes are taken directly out of your paycheck, so they don't come into ordinary income tax calculations . FICA tax rates: 6.2% Social Security tax on first $132,900 of wages 1.45% Medicare tax on first $200.000 of wages for $250.000 if married filing iointly or $125.000 if married filing separately) 2.35% Medicare tax on all wages in excess of $200,000 (or $250,000 if married filing jointly or $125.000 if married filing separately) Tax Table Individual Taxpayers If Taxable Income Is Between: The Tax Due Is: 0 - $9,700 10% of taxable income $9,701 - $39,475 $970 + 12% of the amount over $9,700 $39,476 - $84,200 $4,543 + 22% of the amount over $39,475 $14,382.50 +24% of the amount over $84,200 $84,201 - $160,725 $160,726 - $204,100 $204,101 - $510,300 $32,748.50 + 32% of the amount over $160,725 $46,628.50 + 35% of the amount over $204,100 $153,798.50 +37% of the amount over $510,300 $510,301 + Married Individuals Filing Joint Returns and Surviving Spouses If Taxable Income Is Between: The Tax Due Is: 0 - $19,400 10% of taxable income $19,401 - $78,950 $1,940 + 12% of the amount over $19,400 $9,086 + 22% of the amount over $78,950 $78,951 - $168,400 $168,401 - $321,450 $28,765 + 24% of the amount over $168,400 $321,451 - $408,200 $65,497 + 32% of the amount over $321,450 $408,201 - $612,350 $93,257 + 35% of the amount over $408,200 $612,351 + $164,709.50 + 37% of the amount over $612,350 Heads of Household If Taxable Income Is Between: The Tax Due Is: 0 - $13,850 10% of taxable income $13,851 - $52,850 $1,385 + 12% of the amount over $13,850 $52,851 - $84,200 $6,065 + 22% of the amount over $52,850 $84,201 - $160,700 $12,962 +24% of the amount over $84,200 $160,701 - $204,100 $31,322 + 32% of the amount over $160,700 $204,101 - $510,300 $45,210 + 35% of the amount over $204,100 $510,301 + $152,380 + 37% of the amount over $510,300 Married Filing Separately If Taxable Income Is Between: The Tax Due Is: 0 - $9,700 10% of taxable income $9,701 - $39,475 $970 + 12% of the amount over $9,700 $39,476 - $84,200 $4,543 +22% of the amount over $39,475 $84,201 - $160,725 $14,382.50 +24% of the amount over $84,200 $160,726 - $204,100 $32,748.50 + 32% of the amount over $160,725 $204,101 - $306,175 $46,628.50 + 35% of the amount over $204,100 $306,176 + $82,354.75 + 37% of the amount over $306,175 Current Tax Information The following information is for the 2019 tax vear (that is, the taxes that were filed in 2020). AGI = adjusted gross income Income Taxes Standard Deduction: $12.200 for single taxpavers and married taxpavers filina separately $18,350 for heads of households (single but with dependents) $24.400 for married taxpavers filing jointly and surviving spouses o o Common Tax Credits (simplified): Child Tax Credit: $2000 per qualifying child if AGI is under $200,000 (or $400,000 if married filing iointlv): can only be claimed by one parent if filing separately Earned Income Tax Credit: If you have earned income through wages or self-employment: Credit of $6557 if you have 3 or more qualifying children and AGI is under $50,162 (or $55.952 if vou're married filing iointly) Credit of $5828 if you have 2 qualifying children and AGI is under $46,703 (or $52,493 if you're married filing jointly) Credit of $3526 if vou have 1 qualifving child and AGI is under $41.904 lor $46.884 if you're married filing jointly) Credit of $529 if you have no children and AGI is under $15,570 (or $21,370 if you're married filing jointly) NOTE: Married couples filing separately can't get this credit. American Opportunity Credit: Up to $2500 per student (for tuition, books, and fees) during the first four vears of college if AGI is under $80.000 (or $160.000 if married filing iointly). o O o . Tax credits and negative amount owed: Certain credits (including all the ones listed above) can reduce your tax owed to a negative number. For example, if vour computed tax was $1000 and vou were eligible for a $2000 credit. the government would owe you $1000. There are actually limitations on how much of each credit can be applied toward a negative tax owed. but to keep things simple. we'll ignore that here and assume the full credit can be cuhtracted FICA (Payroll) Taxes FICA taxes are taken directly out of your paycheck, so they don't come into ordinary income tax calculations . FICA tax rates: 6.2% Social Security tax on first $132,900 of wages 1.45% Medicare tax on first $200.000 of wages for $250.000 if married filing iointly or $125.000 if married filing separately) 2.35% Medicare tax on all wages in excess of $200,000 (or $250,000 if married filing jointly or $125.000 if married filing separately) Tax Table Individual Taxpayers If Taxable Income Is Between: The Tax Due Is: 0 - $9,700 10% of taxable income $9,701 - $39,475 $970 + 12% of the amount over $9,700 $39,476 - $84,200 $4,543 + 22% of the amount over $39,475 $14,382.50 +24% of the amount over $84,200 $84,201 - $160,725 $160,726 - $204,100 $204,101 - $510,300 $32,748.50 + 32% of the amount over $160,725 $46,628.50 + 35% of the amount over $204,100 $153,798.50 +37% of the amount over $510,300 $510,301 + Married Individuals Filing Joint Returns and Surviving Spouses If Taxable Income Is Between: The Tax Due Is: 0 - $19,400 10% of taxable income $19,401 - $78,950 $1,940 + 12% of the amount over $19,400 $9,086 + 22% of the amount over $78,950 $78,951 - $168,400 $168,401 - $321,450 $28,765 + 24% of the amount over $168,400 $321,451 - $408,200 $65,497 + 32% of the amount over $321,450 $408,201 - $612,350 $93,257 + 35% of the amount over $408,200 $612,351 + $164,709.50 + 37% of the amount over $612,350 Heads of Household If Taxable Income Is Between: The Tax Due Is: 0 - $13,850 10% of taxable income $13,851 - $52,850 $1,385 + 12% of the amount over $13,850 $52,851 - $84,200 $6,065 + 22% of the amount over $52,850 $84,201 - $160,700 $12,962 +24% of the amount over $84,200 $160,701 - $204,100 $31,322 + 32% of the amount over $160,700 $204,101 - $510,300 $45,210 + 35% of the amount over $204,100 $510,301 + $152,380 + 37% of the amount over $510,300 Married Filing Separately If Taxable Income Is Between: The Tax Due Is: 0 - $9,700 10% of taxable income $9,701 - $39,475 $970 + 12% of the amount over $9,700 $39,476 - $84,200 $4,543 +22% of the amount over $39,475 $84,201 - $160,725 $14,382.50 +24% of the amount over $84,200 $160,726 - $204,100 $32,748.50 + 32% of the amount over $160,725 $204,101 - $306,175 $46,628.50 + 35% of the amount over $204,100 $306,176 + $82,354.75 + 37% of the amount over $306,175