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(download pdf) Income Tax Fundamentals 2019 37th Edition Whittenburg Solutions Manual full chapter
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CHAPTER 7
TAX CREDITS
Group 2 – Problems
1. a. $2,000.
b. $4,000. The income is less than the phase-out range for married taxpayers, so two child credits
are allowed at $2,000 each.
c. $3,700. ($2,000 x 2) + $500 = $4,500; however, AGI of $415,250 exceeds MFJ threshold by $15,250.
Round up and divide by $1,000 = 16 x $50 = $800 phase out. (LO 7.1)
2. The earned income credit is a refundable credit designed to provide financial relief to low-income
working taxpayers. Taxpayers may receive a refund for the credit even though the credit exceeds their
tax liability. (LO 7.2)
3. 1. AGI may not be higher than limits
2. Taxpayer, spouse and all qualifying children must have a SSN issued prior to return due date
3. Married filing separately not allowed
4. U.S. citizenship or resident alien status required
5. Foreign income exclusion not permitted
6. Investment income cannot exceed $3,500 (2018 limit)
7. Must have earned income (LO 7.2)
4. In addition to meeting the 7 general rules, the taxpayer must also meet the following additional 4 rules:
1. Taxpayer must be 25–64 years old
2. Cannot be claimed as a dependent by another
3. Cannot be a qualifying child
4. Must have lived in the U.S. for over half the year (LO 7.2)
5. In addition to meeting the 7 general rules, the taxpayer must also meet the following additional 3 rules:
1. The child must meet the qualifying child tests
2. Qualifying child cannot be claimed by more than one person
3. The taxpayer cannot be the qualifying child of another taxpayer (LO 7.2)
161
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162 Chapter 7 – Tax Credits
8. A taxpayer may have a maximum of $3,500 of investment income in 2018 and still claim the earned income
credit. The likely reason for the investment income limit is that the government intends the earned income
credit to give a helping hand to the working poor. If a low-income worker has investment income over
$3,500 they have savings that indicate to the government that the taxpayer may not need a helping hand
as badly as other taxpayers. (LO 7.2)
11. See the answer to Problem 10. The purpose of this problem is to familiarize the students with the
interactive documents available on the IRS website. As of the date of this book, the forms do not
perform calculations, so students should be told to have a calculator handy. (LO 7.3)
12. None. The credit is intended to help taxpayers who work at income-earning jobs. Therefore, since
John does not earn income (though many would argue that he has a very difficult job caring for two
young children and deserves a respite), no credit is allowed. (LO 7.3)
14. $900. Jean gets credit for $500 a month of earned income while she attends school for 9 months, or
$4,500 of earned income for the year. Therefore, the maximum qualifying expenses for their dependents
are limited to $4,500. The credit is calculated as $4,500 (which is less than the $6,000 maximum costs
allowed for two children, and less than the $10,000 actually paid) x 20% = $900. (LO 7.3)
15. $463.33. The Flat Dollar Amount is $695 ÷ 12 x 8 = $463.33. Percentage Income Amount is ($28,000 –
$12,000) x 2.5% = $400. The larger of the two is $463.33 which is well below the bronze premium cap.
(LO 7.4)
16. $7,473. Modified household income is $50,790. The FPL for a family of 4 is $24,600. The Collins’
income is $50,790 ÷ $24,600 = 2.06 or 206% of the FPL. The applicable amount is 0.0655. Thus the annual
contribution amount is $50,790 x 0.0655 = $3,327. The cost of a silver plan for a four-person household
in Iowa is $10,800; thus, the actual premium tax credit is $10,800 – $3,327 = $7,473, which is less than
the maximum of actual premiums paid of $9,800. (LO 7.4)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 163
17. The maximum premium assistance is $7,473 (the cost of the silver plan of $10,800 less the annual
contribution amount calculated in the previous solution $3,327). The actual amount advanced is
$9,200 resulting in a net excess advance premium tax credit of $1,727 ($9,200 – $7,473). However,
the repayment amount is capped at $1,550 for a married filing jointly taxpayer with income at the
206% FPL (calculated in previous question). (LO 7.4)
18. The American Opportunity tax credit and lifetime learning credit are in the tax law to give assistance to
low and middle-income students and/or their parents in paying for education. As discussed in Chapter 1,
the tax law is used to encourage certain activities, and a well-educated, skilled and competitive workforce
is obviously the goal of these education tax credits. Congress hopes to encourage students in pursuing
college and ongoing lifetime education. (LO 7.5)
19. The American Opportunity tax credit covers only the first 4 years of postsecondary education with at least
a half-time course load, so it encourages students to continue their education after high school. The lifetime
learning credit may be claimed for any year of college or graduate school, and may also be claimed for
educational courses taken during any stage of life to encourage lifelong ongoing education. The education
is not required to be at the more than half-time level, so the lifelong learning credit benefits students who
take a class occasionally. (LO 7.5)
20. a. $1,250. Janie’s American Opportunity tax credit before any phase-out, will be 100% of the first $2,000
plus 25% of the next $2,000, or $2,500. Because her parents have AGI over $160,000, the credit is
phased out partially: the credit is reduced by the following amount $2,500 x ($170,000 – $160,000) /
$20,000 = $1,250. Therefore, the credit is $2,500 – $1,250 = $1,250.
b. $2,500. Janie’s parents have AGI below the phase-out range so they qualify for the full American
Opportunity tax credit. (LO 7.5)
21. a. $0. Jasper’s income is too high to qualify for the lifetime learning credit. The ceiling for claiming
any part of the credit for single taxpayers is $67,000 in 2018. If Jasper were married and supporting
a non-working wife, however, he would qualify for the full credit since the credit begins to phase-out
for married taxpayers at $114,000. If he were married, his credit would be $400, or 20% of $2,000.
b. Jasper qualifies for the full credit of $400, or 20% of $2,000. (LO 7.5)
22. Martha and Lew should claim the credit. If they deduct the taxes, they will have a $96 tax benefit ($400
deduction at a 24% tax rate). If they claim the $400 credit, they will have a full $400 tax benefit. (LO 7.6)
23. a. $13,810. They may claim the maximum credit of $13,810 in 2018 since that is the year the adoption
was finalized and their qualified adoption expenses exceed the amount of the credit.
b. $0. If the adoption is never finalized, no credit is allowed, since it is a foreign adoption.
c. $11,048. Carl and Jenny’s income is in the phase-out range for the adoption credit. The phase-out
amount is calculated as follows: ($215,140 – $207,140) / $40,000 x $13,810 = $2,762. Only $11,048
of the credit is allowed ($13,810 – $2,762). (LO 7.7)
24. Mike’s credit would be $0. No credit is allowed if the property is used to heat a swimming pool or spa.
(LO 7.8)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
164 Chapter 7 – Tax Credits
The solution to the Cumulative Software Problem is posted on the website for the textbook at
www.cengage.com/login.
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Solutions for Questions and Problems – Chapter 7 165
Group 2: Problem 7
SCHEDULE EIC Earned Income Credit OMB No. 1545-0074
(Form 1040) `
a
Qualifying Child Information
Complete and attach to Form 1040 only if you have a qualifying child.
1040
2018
Department of the Treasury a
Go to www.irs.gov/ScheduleEIC for the latest information.
EIC Attachment
Internal Revenue Service (99) Sequence No. 43
Name(s) shown on return Your social security number
DRAFT AS OF
• See the instructions for Form 1040, line 17a, to make sure that (a) you can take the EIC, and (b) you have a
Before you begin: qualifying child.
• Be sure the child’s name on line 1 and social security number (SSN) on line 2 agree with the child’s social security card.
Otherwise, at the time we process your return, we may reduce or disallow your EIC. If the name or SSN on the child’s
social security card is not correct, call the Social Security Administration at 1-800-772-1213.
F
August 21, 2018
• You can't claim the EIC for a child who didn't live with you for more than half of the year.
!
CAUTION
• If you take the EIC even though you are not eligible, you may not be allowed to take the credit for up to 10 years. See the instructions for details.
• It will take us longer to process your return and issue your refund if you do not fill in all lines that apply for each qualifying child.
DO NOT FILE
1 Child’s name First name Last name First name Last name First name Last name
If you have more than three qualifying
children, you have to list only three to get Margo Simmons Daniel Simmons
the maximum credit.
2 Child’s SSN
The child must have an SSN as defined in
the instructions for Form 1040, line 17a,
unless the child was born and died in
2018. If your child was born and died in 316-31-4890 316-31-7894
2018 and did not have an SSN, enter
“Died” on this line and attach a copy of
the child’s birth certificate, death
certificate, or hospital medical records
showing a live birth.
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
166 Chapter 7 – Tax Credits
Before you begin: Be sure you are using the correct worksheet. Use this worksheet only if you
answered “No” to Step 5, question 2. Otherwise, use Worksheet B.
DRAFT AS OF 17,000
Part 1 1. Enter your earned income from Step 5. 1
x No. Go to line 5.
5. If you have:
Part 2 ● No qualifying children, is the amount on line 3 less than $8,500
($14,200 if married filing jointly)?
Filers Who ● 1 or more qualifying children, is the amount on line 3 less than
Part 3
6. This is your earned income credit. 6 5,716
Enter this amount on
Your Earned Form 1040, line 17a.
Income Credit
Reminder—
1040 1040
If you have a qualifying child, complete and attach Schedule EIC.
EIC
If your EIC for a year after 1996 was reduced or disallowed, see
Form 8862, who must file, earlier, to find out if you must file Form 8862 to take the
CAUTION credit for 2018.
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Solutions for Questions and Problems – Chapter 7 167
Comprehensive Problem 1
OMB No. 1545-0074 IRS Use Only—Do not write or staple in this space.
Filing status: Single x Married filing jointly Married filing separately Head of household Qualifying widow(er)
Your first name and initial Last name Your social security number
David Jasper 577 11 3311
Your standard deduction: Someone can claim you as a dependent You were born before January 2, 1954 You are blind
Spouse’s social security number
DRAFT AS OF
If joint return, spouse's first name and initial Last name
Darlene Jasper 477 98 4731
Spouse standard deduction: Someone can claim your spouse as a dependent Spouse was born before January 2, 1954 Full-year health care coverage
Spouse is blind Spouse itemizes on a separate return or you were dual-status alien or exempt (see inst.)
Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign
4639 Honeysuckle Lane (see inst.) You Spouse
Sign
Here DO NOT FILE
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature Date Your occupation
Office Manager
If the IRS sent you an Identity Protection
F
Firm’s address a
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
168 Chapter 7 – Tax Credits
DRAFT AS OF
Standard subtract Schedule 1, line 36, from line 6 . . . . . . . . . . . . . . . . . 7 53,600
Deduction for— 8 Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . 8 24,000
• Single or married
filing separately, 9 Qualified business income deduction (see instructions) . . . . . . . . . . . . . . 9
$12,000
10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0- . . . . . . . . 10 29,600
3,174
• Married filing
jointly or Qualifying 11 a Tax (see inst) (check if any from: 1 Form(s) 8814 2 Form 4972 3 )
3,174
DO NOT FILE
see instructions.
17 Refundable credits: a EIC (see inst.) b Sch 8812 c Form 8863
Add any amount from Schedule 5 . . . . . . . . . . . . . . 17
18 Add lines 16 and 17. These are your total payments . . . . . . . . . . . . . . 18 5,450
Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid . . . . 19 4,297
20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here . . . . a 20a 4,297
Direct deposit? a b Routing number a c Type: Checking Savings
See instructions.
a d Account number
21 Amount of line 19 you want applied to your 2019 estimated tax . . a 21
Amount You Owe 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions . . . a 22
23 Estimated tax penalty (see instructions) . . . . . . . . a 23
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 169
DRAFT AS OF
Credits 49 Credit for child and dependent care expenses. Attach Form 2441 . . . . . . . 49 600
50 Education credits from Form 8863, line 19 . . . . . . . . . . . . . . 50
51 Retirement savings contributions credit. Attach Form 8880 . . . . . . . . . 51
52 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . 52
53 Residential energy credit. Attach Form 5695 . . . . . . . . . . . . . . 53
DO NOT FILE
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
170 Chapter 7 – Tax Credits
DRAFT AS OF
58 Unreported social security and Medicare tax from: Form a 4137 b 8919 58
Taxes
59 Additional tax on IRAs, other qualified retirement plans, and other tax-favored
accounts. Attach Form 5329 if required . . . . . . . . . . . . . 59
60a Household employment taxes. Attach Schedule H . . . . . . . . . . 60a
b Repayment of first-time homebuyer credit from Form 5405. Attach Form 5405 if
DO NOT FILE
965-A . . . . . . . . . . . . . . 63
64 Add the amounts in the far right column. These are your total other taxes. Enter
here and on Form 1040, line 14 . . . . . . . . . . . . . . . . 64 579
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 71481R Schedule 4 (Form 1040) 2018
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 171
DRAFT AS OF
and 1 Medical and dental expenses (see instructions) . . . . . 1 6,460
Dental 2 Enter amount from Form 1040, line 7 2 53,600
Expenses 3 Multiply line 2 by 7.5% (0.075) . . . . . . . . . . . 3 4,020
4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- . . . . . . . . 4 2,440
Taxes You 5 State and local taxes
DO NOT FILE
c State and local personal property taxes . . . . . . . . 5c
d Add lines 5a through 5c . . . . . . . . . . . . . 5d 3,665
e Enter the smaller of line 5d and $10,000 ($5,000 if married filing
separately) . . . . . . . . . . . . . . . . . 5e 3,665
6 Other taxes. List type and amount a
6
7 Add lines 5e and 6 . . . . . . . . . . . . . . . . . . . . . . 7 3,665
Interest You 8 Home mortgage interest and points. If you didn't use all of your
Paid home mortgage loan(s) to buy, build, or improve your home,
Caution: Your see instructions and check this box . . . . . . . a
mortgage interest
deduction may be a Home mortgage interest and points reported to you on Form
limited (see
instructions). 1098 . . . . . . . . . . . . . . . . . . . 8a 11,200
b Home mortgage interest not reported to you on Form 1098. If
paid to the person from whom you bought the home, see
instructions and show that person's name, identifying no., and
address a
8b
c Points not reported to you on Form 1098. See instructions for
special rules . . . . . . . . . . . . . . . . . 8c
d Reserved . . . . . . . . . . . . . . . . . . 8d
e Add lines 8a through 8c . . . . . . . . . . . . . 8e 11,200
9 Investment interest. Attach Form 4952 if required. See
instructions . . . . . . . . . . . . . . . . . 9
10 Add lines 8e and 9 . . . . . . . . . . . . . . . . . . . . . . 10 11,200
Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more,
Charity see instructions . . . . . . . . . . . . . . . 11 1,020
12 Other than by cash or check. If any gift of $250 or more, see
If you made a
gift and got a instructions. You must attach Form 8283 if over $500 . . . 12
benefit for it, 13 Carryover from prior year . . . . . . . . . . . . 13
see instructions.
14 Add lines 11 through 13 . . . . . . . . . . . . . . . . . . . . . 14 1,020
Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified
Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See
instructions . . . . . . . . . . . . . . . . . . . . . . . . . 15
Other 16 Other—from list in instructions. List type and amount a
Itemized
Deductions 16
Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on
Itemized Form 1040, line 8 . . . . . . . . . . . . . . . . . . . . . . . 17 18,325
Deductions 18 If you elect to itemize deductions even though they are less than your standard
deduction, check here . . . . . . . . . . . . . . . . . . . a
For Paperwork Reduction Act Notice, see the Instructions for Form 1040. Cat. No. 17145C Schedule A (Form 1040) 2018
Because the total itemized deductions are less than the $24,000 standard deduction, Schedule A will not be filed.
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
172 Chapter 7 – Tax Credits
DRAFT AS OF
1 List name of payer. If any interest is from a seller-financed mortgage and the
buyer used the property as a personal residence, see the instructions and list this
Interest interest first. Also, show that buyer’s social security number and address a
(See instructions
and the Pine Tree Savings and Loan 1,900
instructions for
Note: If you 1
received a Form
1099-INT, Form
1099-OID, or
substitute
DO NOT FILE
statement from
a brokerage firm,
list the firm’s
name as the
payer and enter
the total interest
shown on that
form.
2 Add the amounts on line 1 . . . . . . . . . . . . . . . . . . . 2 1,900
3
Excludable interest on series EE and I U.S. savings bonds issued after 1989.
Attach Form 8815 . . . . . . . . . . . . . . . . . . . . . . 3
4 Subtract line 3 from line 2. Enter the result here and on Form 1040, line 2b . . a 4 1,900
Note: If line 4 is over $1,500, you must complete Part III. Amount
Part II 5 List name of payer a
Ordinary
Dividends
(See instructions
and the
instructions for
Form 1040,
line 3b.) 5
Note: If you
received a Form
1099-DIV or
substitute
statement from
a brokerage firm,
list the firm’s
name as the
payer and enter
the ordinary
dividends shown
on that form.
6 Add the amounts on line 5. Enter the total here and on Form 1040, line 3b . . a 6
Note: If line 6 is over $1,500, you must complete Part III.
Part III You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a
Yes No
foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.
Foreign 7a At any time during 2018, did you have a financial interest in or signature authority over a financial
Accounts account (such as a bank account, securities account, or brokerage account) located in a foreign
country? See instructions . . . . . . . . . . . . . . . . . . . . . . . . X
and Trusts
If “Yes,” are you required to file FinCEN Form 114, Report of Foreign Bank and Financial
Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114
(See instructions.)
and its instructions for filing requirements and exceptions to those requirements . . . . . .
b If you are required to file FinCEN Form 114, enter the name of the foreign country where the
financial account is located a
8 During 2018, did you receive a distribution from, or were you the grantor of, or transferor to, a
foreign trust? If “Yes,” you may have to file Form 3520. See instructions . . . . . . . . . X
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 17146N Schedule B (Form 1040) 2018
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Solutions for Questions and Problems – Chapter 7 173
2018
..........
DRAFT AS OF
You cannot claim a credit for child and dependent care expenses if your filing status is married filing separately unless you meet the
requirements listed in the instructions under “Married Persons Filing Separately.” If you meet these requirements, check this box.
Part I Persons or Organizations Who Provided the Care—You must complete this part.
(If you have more than two care providers, see the instructions.)
1 (a) Care provider’s (b) Address (c) Identifying number (d) Amount paid
October 2, 2018
name (number, street, apt. no., city, state, and ZIP code) (SSN or EIN) (see instructions)
DO NOT FILE
Did you receive No a Complete only Part II below.
dependent care benefits? Yes a Complete Part III on the back next.
Caution: If the care was provided in your home, you may owe employment taxes. For details, see the instructions for Schedule 4
(Form 1040), line 60a; or Form 1040NR, line 59a.
Part II Credit for Child and Dependent Care Expenses
2 Information about your qualifying person(s). If you have more than two qualifying persons, see the instructions.
(a) Qualifying person’s name (b) Qualifying person’s social (c) Qualified expenses you
security number incurred and paid in 2018 for the
First Last person listed in column (a)
3 Add the amounts in column (c) of line 2. Don’t enter more than $3,000 for one qualifying
person or $6,000 for two or more persons. If you completed Part III, enter the amount
from line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3,000
4 Enter your earned income. See instructions . . . . . . . . . . . . . . . 4 26,500
5 If married filing jointly, enter your spouse’s earned income (if you or your spouse was a
student or was disabled, see the instructions); all others, enter the amount from line 4 . 5 25,200
6 Enter the smallest of line 3, 4, or 5 . . . . . . . . . . . . . . . . . . 6 3,000
7 Enter the amount from Form 1040, line 7; or Form
1040NR, line 36 . . . . . . . . . . . . . 7 53,600
8 Enter on line 8 the decimal amount shown below that applies to the amount on line 7
If line 7 is: If line 7 is:
But not Decimal But not Decimal
Over over amount is Over over amount is
$0—15,000 .35 $29,000—31,000 .27
15,000—17,000 .34 31,000—33,000 .26
17,000—19,000 .33 33,000—35,000 .25 8 X. 20
19,000—21,000 .32 35,000—37,000 .24
21,000—23,000 .31 37,000—39,000 .23
23,000—25,000 .30 39,000—41,000 .22
25,000—27,000 .29 41,000—43,000 .21
27,000—29,000 .28 43,000—No limit .20
9 Multiply line 6 by the decimal amount on line 8. If you paid 2017 expenses in 2018, see
the instructions . . . . . . . . . . . . . . . . . . . . . . . . . 9 600
10 Tax liability limit. Enter the amount from the Credit
Limit Worksheet in the instructions. . . . . . . 10 3,174 *
11 Credit for child and dependent care expenses. Enter the smaller of line 9 or line 10
here and on Schedule 3 (Form 1040), line 49; or Form 1040NR, line 47 . . . . . . . 11 600
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11862M Form 2441 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
174 Chapter 7 – Tax Credits
DRAFT AS OF
13 Enter the amount, if any, you carried over from 2017 and used in 2018 during the grace
period. See instructions . . . . . . . . . . . . . . . . . . . . . . . 13
14 Enter the amount, if any, you forfeited or carried forward to 2019. See instructions . . . 14 ( )
15 Combine lines 12 through 14. See instructions . . . . . . . . . . . . . . . 15
16 Enter the total amount of qualified expenses incurred
October 2, 2018
in 2018 for the care of the qualifying person(s) . . . 16
17 Enter the smaller of line 15 or 16 . . . . . . . . 17
18 Enter your earned income. See instructions . . . . 18
19 Enter the amount shown below that applies
} FILE
to you.
DO NOT
• If married filing jointly, enter your
spouse’s earned income (if you or your
spouse was a student or was disabled,
see the instructions for line 5). . . . 19
• If married filing separately, see
instructions.
• All others, enter the amount from line 18.
20 Enter the smallest of line 17, 18, or 19 . . . . . . 20
21 Enter $5,000 ($2,500 if married filing separately and
you were required to enter your spouse’s earned
income on line 19) . . . . . . . . . . . . . 21
22 Is any amount on line 12 from your sole proprietorship or partnership?
No. Enter -0-.
Yes. Enter the amount here . . . . . . . . . . . . . . . . . . . . 22
23 Subtract line 22 from line 15 . . . . . . . . . 23
24 Deductible benefits. Enter the smallest of line 20, 21, or 22. Also, include this amount on
the appropriate line(s) of your return. See instructions . . . . . . . . . . . . . 24
25 Excluded benefits. If you checked “No” on line 22, enter the smaller of line 20 or 21.
Otherwise, subtract line 24 from the smaller of line 20 or line 21. If zero or less, enter -0- . 25
26 Taxable benefits. Subtract line 25 from line 23. If zero or less, enter -0-. Also, include this
amount on Form 1040, line 1; or Form 1040NR, line 8. On the dotted line next to Form
1040, line 1; or Form 1040NR, line 8, enter “DCB” . . . . . . . . . . . . . . 26
To claim the child and dependent care
credit, complete lines 27 through 31 below.
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 175
* At the time we went to press, the 2018 shared responsibility worksheets were not available. The 2017 worksheets have
been adapted to 2018 use.
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Worksheet.indd 1 23/09/16 4:40 PM
176 Chapter 7 – Tax Credits
!
CAUTION
Do not complete this worksheet unless the amount on line 10 of the Shared Responsibility Payment Worksheet is less
than $2,085.
Yes No
For each month, is the amount on line 5 of the Shared Responsibility Payment Worksheet
less than the amount on line 10 of the Shared Responsibility Payment Worksheet?* Enter the amount Enter the amount
from line 10 from line 5
1. January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. June . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. July . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. September . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,738
10. October . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,738
11. November . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,738
12. December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,738
13. Add the amounts in each column . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,952
14. Add the amounts on line 13 of both columns. Enter the result on line 11 of the Shared
Responsibility Payment Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,952
*If the amount on line 1 of the Shared Responsibility Payment Worksheet is -0- for any month, leave both columns of this worksheet blank for that
month.
Comprehensive Problem 2A
OMB No. 1545-0074 IRS Use Only—Do not write or staple in this space.
Filing status: Single Married filing jointly Married filing separately x Head of household Qualifying widow(er)
Your first name and initial Last name Your social security number
Steve Jackson 465 88 9415
Your standard deduction: Someone can claim you as a dependent You were born before January 2, 1954 You are blind
Spouse’s social security number
DRAFT AS OF
If joint return, spouse's first name and initial Last name
Spouse standard deduction: Someone can claim your spouse as a dependent Spouse was born before January 2, 1954 x Full-year health care coverage
Spouse is blind Spouse itemizes on a separate return or you were dual-status alien or exempt (see inst.)
Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign
3215 Pacific Drive B (see inst.) You Spouse
Sign
Here DO NOT FILE
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature Date Your occupation If the IRS sent you an Identity Protection
F
PIN, enter it
Joint return?
See instructions. Laundry Attendant here (see inst.)
Keep a copy for Spouse’s signature. If a joint return, both must sign. Date Spouse’s occupation If the IRS sent you an Identity Protection
your records. PIN, enter it
here (see inst.)
Preparer’s name Preparer’s signature PTIN Firm’s EIN Check if:
Paid 3rd Party Designee
Preparer Self-employed
Firm’s name Phone no.
Use Only
a
Firm’s address a
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
178 Chapter 7 – Tax Credits
DRAFT AS OF
Standard subtract Schedule 1, line 36, from line 6 . . . . . . . . . . . . . . . . . 7 21,500
Deduction for— 8 Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . 8 18,000
• Single or married
filing separately, 9 Qualified business income deduction (see instructions) . . . . . . . . . . . . . . 9
$12,000
• Married filing
10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0- . . . . . . . . 10 3,500
jointly or Qualifying 11 a Tax (see inst) 353 (check if any from: 1 Form(s) 8814 2 Form 4972 3 )
353
DO NOT FILE
see instructions.
17 Refundable credits: a EIC (see inst.) 3,003 b Sch 8812 1,400 c Form 8863
Add any amount from Schedule 5 . . . . . . . . . . . . . . 17 4,403
18 Add lines 16 and 17. These are your total payments . . . . . . . . . . . . . . 18 4,618
Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid . . . . 19 4,618
20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here . . . . a 20a 4,618
Direct deposit? a b Routing number a c Type: Checking Savings
See instructions.
a d Account number
21 Amount of line 19 you want applied to your 2019 estimated tax . . a 21
Amount You Owe 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions . . . a 22
23 Estimated tax penalty (see instructions) . . . . . . . . a 23
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 179
DRAFT AS OF
Credits 49 Credit for child and dependent care expenses. Attach Form 2441 . . . . . . . 49 307
50 Education credits from Form 8863, line 19 . . . . . . . . . . . . . . 50
51 Retirement savings contributions credit. Attach Form 8880 . . . . . . . . . 51
52 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . 52
53 Residential energy credit. Attach Form 5695 . . . . . . . . . . . . . . 53
DO NOT FILE
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
180 Chapter 7 – Tax Credits
)RUP²/LQHD
Comprehensive Problem 2A, cont.
DRAFT AS OF
CAUTION 2. If you don’t have a qualifying child, you can’t claim the child tax credit; but you may be able to claim the credit for
other dependents for that child, see Step 3 under Who Qualifies as Your Dependent.
3. To see if your qualifying relative qualifies you to take the credit for other dependents, see Step 5 under Who Qualifies as Your
Dependent.
4. Be sure to see Social security number under Who Qualifies as Your Dependent.
No. STOP
You can’t take the child tax credit on Form 1040,
line 12a. You also can’t take the additional child
tax credit on Form 1040, line 17b. Complete the rest
of your Form 1040.
X Yes. Subtract line 7 from line 3. Enter the result. 8 2,500
Go to Part 2.
1HHGPRUHLQIRUPDWLRQRUIRUPV"9LVLW,56JRY ƖʻʹƖ
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Solutions for Questions and Problems – Chapter 7 181
DRAFT AS OF
Part 2 9. Enter the amount from Form 1040, line 11. 9 353
10 307
Enter the total.
Yes. STOP
You can’t take this credit because there is no tax to reduce.
However, you may be able to take the additional child tax
credit if line 1 is more than zero. See the TIP below.
X No. Subtract line 10 from line 9.
11 46
12. Is the amount on line 8 more than the amount on line 11?
If your child tax credit or additional child tax credit for a year after
2015 was reduced or disallowed, see Form 8862, who must file to
XCAUTION find out if you must file Form 8862 to take the credit for 2018.
* If applicable.
ƖʻʺƖ 1HHGPRUHLQIRUPDWLRQRUIRUPV"9LVLW,56JRY
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
182 Chapter 7 – Tax Credits
SCHEDULE 8812
(Form 1040) Additional Child Tax Credit 1040 `
OMB No. 1545-0074
DRAFT AS OF
Part I All Filers
Caution: If you file Form 2555 or 2555-EZ, stop here; you cannot claim the additional child tax credit.
1 If you are required to use the worksheet in Pub. 972, enter the amount from line 10 of the Child Tax Credit
}
and Credit for Other Dependents Worksheet in the publication. Otherwise:
1040 filers: Enter the amount from line 8 of your Child Tax Credit and Credit for Other
August 9, 2018
Dependents Worksheet (see the instructions for Form 1040, line 12a). 1 2,500
1040NR filers: Enter the amount from line 8 of your Child Tax Credit and Credit for Other
Dependents Worksheet (see the instructions for Form 1040NR, line 49).
2 Enter the amount from Form 1040, line 12a, or Form 1040NR, line 49 . . . . . . . . . . . . 2 46
3 Subtract line 2 from line 1. If zero, stop here; you cannot claim this credit . . . . . . . . . . . 3 2,454
1
DO NOT FILE
4 Number of qualifying children under 17 with the required social security number: X $1,400.
Enter the result. If zero, stop here; you cannot claim this credit . . . . . . . . . . . . . . 4 1,400
TIP: The number of children you use for this line is the same as the number of children you used for line 1 of
the Child Tax Credit and Credit for Other Dependents Worksheet.
5 Enter the smaller of line 3 or line 4 . . . . . . . . . . . . . . . . . . . . . . 5 1,400
6a Earned income (see separate instructions) . . . . . . . . . . . 6a 21,500
b Nontaxable combat pay (see separate
instructions) . . . . . . . . . . . 6b
7 Is the amount on line 6a more than $2,500?
No. Leave line 7 blank and enter -0- on line 8.
x Yes. Subtract $2,500 from the amount on line 6a. Enter the result . . . 7 19,000
8 Multiply the amount on line 7 by 15% (0.15) and enter the result . . . . . . . . . . . . . . 8 2,850
Next. On line 4, is the amount $4,200 or more?
x No. If line 8 is zero, stop here; you cannot claim this credit. Otherwise, skip Part II and enter the
smaller of line 5 or line 8 on line 15.
Yes. If line 8 is equal to or more than line 5, skip Part II and enter the amount from line 5 on line 15.
Otherwise, go to line 9.
Part II Certain Filers Who Have Three or More Qualifying Children
9 Withheld social security, Medicare, and Additional Medicare taxes from
Form(s) W-2, boxes 4 and 6. If married filing jointly, include your spouse’s
amounts with yours. If your employer withheld or you paid Additional
}
Medicare Tax or tier 1 RRTA taxes, see separate instructions . . . . . . 9
10 1040 filers: Enter the total of the amounts from Schedule 1 (Form
1040), line 27, and Schedule 4 (Form 1040), line 58,
plus any taxes that you identified using code “UT” and
entered on Schedule 4 (Form 1040), line 62. 10
1040NR filers: Enter the total of the amounts from Form 1040NR,
lines 27 and 56, plus any taxes that you identified using
code “UT” and entered on line 60.
11 Add lines 9 and 10 . . . . . . . . . . . . . . . . . . 11
}
12 1040 filers: Enter the total of the amounts from Form 1040, line
17a, and Schedule 5 (Form 1040), line 72.
1040NR filers: Enter the amount from Form 1040NR, line 67. 12
13 Subtract line 12 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . . . . 13
14 Enter the larger of line 8 or line 13 . . . . . . . . . . . . . . . . . . . . . . 14
Next, enter the smaller of line 5 or line 14 on line 15.
Part III Additional Child Tax Credit
15 This is your additional child tax credit . . . . . . . . . . . . . . . . . . . . . 15 1,400
Enter this amount on
1040 Form 1040, line 17b, or
Form 1040NR, line 64.
1040NR `
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 59761M Schedule 8812 (Form 1040) 2018
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 183
2018
..........
DRAFT AS OF
You cannot claim a credit for child and dependent care expenses if your filing status is married filing separately unless you meet the
requirements listed in the instructions under “Married Persons Filing Separately.” If you meet these requirements, check this box.
Part I Persons or Organizations Who Provided the Care—You must complete this part.
(If you have more than two care providers, see the instructions.)
1 (a) Care provider’s (b) Address (c) Identifying number (d) Amount paid
October 2, 2018
name (number, street, apt. no., city, state, and ZIP code) (SSN or EIN) (see instructions)
DO NOT FILE
Did you receive No a Complete only Part II below.
dependent care benefits? Yes a Complete Part III on the back next.
Caution: If the care was provided in your home, you may owe employment taxes. For details, see the instructions for Schedule 4
(Form 1040), line 60a; or Form 1040NR, line 59a.
Part II Credit for Child and Dependent Care Expenses
2 Information about your qualifying person(s). If you have more than two qualifying persons, see the instructions.
(a) Qualifying person’s name (b) Qualifying person’s social (c) Qualified expenses you
security number incurred and paid in 2018 for the
First Last person listed in column (a)
3 Add the amounts in column (c) of line 2. Don’t enter more than $3,000 for one qualifying
person or $6,000 for two or more persons. If you completed Part III, enter the amount
from line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . 3 990
4 Enter your earned income. See instructions . . . . . . . . . . . . . . . 4 21,500
5 If married filing jointly, enter your spouse’s earned income (if you or your spouse was a
student or was disabled, see the instructions); all others, enter the amount from line 4 . 5 21,500
6 Enter the smallest of line 3, 4, or 5 . . . . . . . . . . . . . . . . . . 6 990
7 Enter the amount from Form 1040, line 7; or Form
1040NR, line 36 . . . . . . . . . . . . . 7 21,500
8 Enter on line 8 the decimal amount shown below that applies to the amount on line 7
If line 7 is: If line 7 is:
But not Decimal But not Decimal
Over over amount is Over over amount is
$0—15,000 .35 $29,000—31,000 .27
15,000—17,000 .34 31,000—33,000 .26
17,000—19,000 .33 33,000—35,000 .25 8 X. 31
19,000—21,000 .32 35,000—37,000 .24
21,000—23,000 .31 37,000—39,000 .23
23,000—25,000 .30 39,000—41,000 .22
25,000—27,000 .29 41,000—43,000 .21
27,000—29,000 .28 43,000—No limit .20
9 Multiply line 6 by the decimal amount on line 8. If you paid 2017 expenses in 2018, see
the instructions . . . . . . . . . . . . . . . . . . . . . . . . . 9 307
10 Tax liability limit. Enter the amount from the Credit
Limit Worksheet in the instructions. . . . . . . 10 353
11 Credit for child and dependent care expenses. Enter the smaller of line 9 or line 10
here and on Schedule 3 (Form 1040), line 49; or Form 1040NR, line 47 . . . . . . . 11 307
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11862M Form 2441 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
184 Chapter 7 – Tax Credits
DRAFT AS OF
13 Enter the amount, if any, you carried over from 2017 and used in 2018 during the grace
period. See instructions . . . . . . . . . . . . . . . . . . . . . . . 13
14 Enter the amount, if any, you forfeited or carried forward to 2019. See instructions . . . 14 ( )
15 Combine lines 12 through 14. See instructions . . . . . . . . . . . . . . . 15
16 Enter the total amount of qualified expenses incurred
October 2, 2018
in 2018 for the care of the qualifying person(s) . . . 16
17 Enter the smaller of line 15 or 16 . . . . . . . . 17
18 Enter your earned income. See instructions . . . . 18
19 Enter the amount shown below that applies
} FILE
to you.
DO NOT
• If married filing jointly, enter your
spouse’s earned income (if you or your
spouse was a student or was disabled,
see the instructions for line 5). . . . 19
• If married filing separately, see
instructions.
• All others, enter the amount from line 18.
20 Enter the smallest of line 17, 18, or 19 . . . . . . 20
21 Enter $5,000 ($2,500 if married filing separately and
you were required to enter your spouse’s earned
income on line 19) . . . . . . . . . . . . . 21
22 Is any amount on line 12 from your sole proprietorship or partnership?
No. Enter -0-.
Yes. Enter the amount here . . . . . . . . . . . . . . . . . . . . 22
23 Subtract line 22 from line 15 . . . . . . . . . 23
24 Deductible benefits. Enter the smallest of line 20, 21, or 22. Also, include this amount on
the appropriate line(s) of your return. See instructions . . . . . . . . . . . . . 24
25 Excluded benefits. If you checked “No” on line 22, enter the smaller of line 20 or 21.
Otherwise, subtract line 24 from the smaller of line 20 or line 21. If zero or less, enter -0- . 25
26 Taxable benefits. Subtract line 25 from line 23. If zero or less, enter -0-. Also, include this
amount on Form 1040, line 1; or Form 1040NR, line 8. On the dotted line next to Form
1040, line 1; or Form 1040NR, line 8, enter “DCB” . . . . . . . . . . . . . . 26
To claim the child and dependent care
credit, complete lines 27 through 31 below.
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 185
Before you begin: Be sure you are using the correct worksheet. Use this worksheet only if you
answered “No” to Step 5, question 2. Otherwise, use Worksheet B.
DRAFT AS OF 21,500
Part 1 1. Enter your earned income from Step 5. 1
No. Go to line 5.
5. If you have:
Part 2 ● No qualifying children, is the amount on line 3 less than $8,500
($14,200 if married filing jointly)?
Filers Who ● 1 or more qualifying children, is the amount on line 3 less than
Part 3
6. This is your earned income credit. 6 3,003
Enter this amount on
Your Earned Form 1040, line 17a.
Income Credit
Reminder—
1040 1040
If you have a qualifying child, complete and attach Schedule EIC.
EIC
If your EIC for a year after 1996 was reduced or disallowed, see
Form 8862, who must file, earlier, to find out if you must file Form 8862 to take the
CAUTION credit for 2018.
1HHGPRUHLQIRUPDWLRQRUIRUPV"9LVLW,56JRY ƖʼʷƖ
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
186 Chapter 7 – Tax Credits
DRAFT AS OF
• See the instructions for Form 1040, line 17a, to make sure that (a) you can take the EIC, and (b) you have a
Before you begin: qualifying child.
• Be sure the child’s name on line 1 and social security number (SSN) on line 2 agree with the child’s social security card.
Otherwise, at the time we process your return, we may reduce or disallow your EIC. If the name or SSN on the child’s
social security card is not correct, call the Social Security Administration at 1-800-772-1213.
F
August 21, 2018
• You can't claim the EIC for a child who didn't live with you for more than half of the year.
!
CAUTION
• If you take the EIC even though you are not eligible, you may not be allowed to take the credit for up to 10 years. See the instructions for details.
• It will take us longer to process your return and issue your refund if you do not fill in all lines that apply for each qualifying child.
DO NOT FILE
1 Child’s name First name Last name First name Last name First name Last name
If you have more than three qualifying
children, you have to list only three to get Janet Jackson
the maximum credit.
2 Child’s SSN
The child must have an SSN as defined in
the instructions for Form 1040, line 17a,
unless the child was born and died in
2018. If your child was born and died in 654-12-6543
2018 and did not have an SSN, enter
“Died” on this line and attach a copy of
the child’s birth certificate, death
certificate, or hospital medical records
showing a live birth.
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 187
Comprehensive Problem 2B
OMB No. 1545-0074 IRS Use Only—Do not write or staple in this space.
Filing status: x Single Married filing jointly Married filing separately Head of household Qualifying widow(er)
Your first name and initial Last name Your social security number
David Fleming 865 68 9635
Your standard deduction: Someone can claim you as a dependent You were born before January 2, 1954 You are blind
Spouse’s social security number
DRAFT AS OF
If joint return, spouse's first name and initial Last name
Spouse standard deduction: Someone can claim your spouse as a dependent Spouse was born before January 2, 1954 x Full-year health care coverage
Spouse is blind Spouse itemizes on a separate return or you were dual-status alien or exempt (see inst.)
Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign
169 Trendie Street 6B (see inst.) You Spouse
Sign
Here DO NOT FILE
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature Date Your occupation If the IRS sent you an Identity Protection
F
PIN, enter it
Joint return?
See instructions. Delivery Person here (see inst.)
Keep a copy for Spouse’s signature. If a joint return, both must sign. Date Spouse’s occupation If the IRS sent you an Identity Protection
your records. PIN, enter it
here (see inst.)
Preparer’s name Preparer’s signature PTIN Firm’s EIN Check if:
Paid 3rd Party Designee
Preparer Self-employed
Firm’s name Phone no.
Use Only
a
Firm’s address a
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
188 Chapter 7 – Tax Credits
DRAFT AS OF
Standard subtract Schedule 1, line 36, from line 6 . . . . . . . . . . . . . . . . . 7 33,400
Deduction for— 8 Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . 8 12,000
• Single or married
filing separately, 9 Qualified business income deduction (see instructions) . . . . . . . . . . . . . . 9
$12,000
10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0- . . . . . . . . 10 21,400
2,381
• Married filing
jointly or Qualifying 11 a Tax (see inst) (check if any from: 1 Form(s) 8814 2 Form 4972 3 )
x 3,036
DO NOT FILE
see instructions.
17 Refundable credits: a EIC (see inst.) b Sch 8812 c Form 8863
Add any amount from Schedule 5 . . . . . . . . . . . . . . 17
18 Add lines 16 and 17. These are your total payments . . . . . . . . . . . . . . 18 3,700
Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid . . . . 19 664
20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here . . . . a 20a 664
Direct deposit? a b Routing number a c Type: Checking Savings
See instructions.
a d Account number
21 Amount of line 19 you want applied to your 2019 estimated tax . . a 21
Amount You Owe 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions . . . a 22
23 Estimated tax penalty (see instructions) . . . . . . . . a 23
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 189
DRAFT AS OF
10 Taxable refunds, credits, or offsets of state and local income taxes . . . . . 10
Income
11 Alimony received . . . . . . . . . . . . . . . . . . . . . . 11
12 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . 12
13 Capital gain or (loss). Attach Schedule D if required. If not required, check here a 13
14 Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 14
DO NOT FILE
20a Reserved . . . . . . . . . . . . . . . . . . . . . . . . 20b
21 Other income. List type and amount a Prize 21 10,000
22 Combine the amounts in the far right column. If you don’t have any adjustments to
income, enter here and include on Form 1040, line 6. Otherwise, go to line 23 . . 22 10,000
Adjustments 23 Educator expenses . . . . . . . . . . . . 23
to Income 24 Certain business expenses of reservists, performing artists,
and fee-basis government officials. Attach Form 2106 . . 24
25 Health savings account deduction. Attach Form 8889 . 25
26 Moving expenses for members of the Armed Forces.
Attach Form 3903 . . . . . . . . . . . . 26
27 Deductible part of self-employment tax. Attach Schedule SE 27
28 Self-employed SEP, SIMPLE, and qualified plans . . 28
29 Self-employed health insurance deduction . . . . 29
30 Penalty on early withdrawal of savings . . . . . . 30
31a Alimony paid b Recipient’s SSN a 31a
32 IRA deduction . . . . . . . . . . . . . . 32
33 Student loan interest deduction . . . . . . . . 33
34 Reserved . . . . . . . . . . . . . . . 34
35 Reserved . . . . . . . . . . . . . . . 35
36 Add lines 23 through 35 . . . . . . . . . . . . . . . . . . . 36
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 71479F Schedule 1 (Form 1040) 2018
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
190 Chapter 7 – Tax Credits
DRAFT AS OF
45 Alternative minimum tax. Attach Form 6251 . . . . . . . . . . . . . 45
46 Excess advance premium tax credit repayment. Attach Form 8962 . . . . . 46 655
47 Add the amounts in the far right column. Enter here and include on Form 1040,
line 11 . . . . . . . . . . . . . . . . . . . . . . . . . 47 655
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 71478U Schedule 2 (Form 1040) 2018
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Solutions for Questions and Problems – Chapter 7 191
2018
a Attach to Form 1040 or Form 1040NR.
Department of the Treasury Attachment
Internal Revenue Service a Go to www.irs.gov/Form8962 for instructions and the latest information. Sequence No. 73
Name shown on your return Your social security number
DRAFT AS OF
You cannot take the PTC if your filing status is married filing separately unless you qualify for an exception (see instructions). If you qualify, check the box . . a
DO NOT FILE
No. Continue to line 7.
Yes. You are not eligible to take the PTC. If advance payment of the PTC was made, see the instructions for
how to report your excess advance PTC repayment amount.
7 Applicable Figure. Using your line 5 percentage, locate your “applicable figure” on the table in the instructions . . 7 .0886
8a Annual contribution amount. Multiply line 3 by b Monthly contribution amount. Divide line 8a
line 7. Round to nearest whole dollar amount 8a 2,959 by 12. Round to nearest whole dollar amount 8b 247
Part II Premium Tax Credit Claim and Reconciliation of Advance Payment of Premium Tax Credit
9 Are you allocating policy amounts with another taxpayer or do you want to use the alternative calculation for year of marriage (see instructions)?
Yes. Skip to Part IV, Allocation of Policy Amounts, or Part V, Alternative Calculation for Year of Marriage. x No. Continue to line 10.
10 See the instructions to determine if you can use line 11 or must complete lines 12 through 23.
x Yes. Continue to line 11. Compute your annual PTC. Then skip lines 12–23 No. Continue to lines 12–23. Compute
and continue to line 24. your monthly PTC and continue to line 24.
(b) Annual applicable (d) Annual maximum
(a) Annual enrollment (c) Annual (e) Annual premium tax (f) Annual advance
Annual SLCSP premium premium assistance
premiums (Form(s) contribution amount credit allowed payment of PTC (Form(s)
Calculation (Form(s) 1095-A, (subtract (c) from (b), if
1095-A, line 33C)
1095-A, line 33A) line 33B) (line 8a) (smaller of (a) or (d))
zero or less, enter -0-)
11 Annual Totals 3,600 4,020 2,959 1,061 1,061 1,716
(c) Monthly
(a) Monthly enrollment (b) Monthly applicable (d) Monthly maximum (f) Monthly advance
contribution amount (e) Monthly premium tax
Monthly premiums (Form(s) SLCSP premium premium assistance payment of PTC (Form(s)
(amount from line 8b credit allowed
Calculation 1095-A, lines 21–32, (Form(s) 1095-A, lines (subtract (c) from (b), if 1095-A, lines 21–32,
or alternative marriage (smaller of (a) or (d))
column A) 21–32, column B) zero or less, enter -0-) column C)
monthly calculation)
12 January
13 February
14 March
15 April
16 May
17 June
18 July
19 August
20 September
21 October
22 November
23 December
24 Total premium tax credit. Enter the amount from line 11(e) or add lines 12(e) through 23(e) and enter the total here 24 1,061
25 Advance payment of PTC. Enter the amount from line 11(f) or add lines 12(f) through 23(f) and enter the total here 25 1,716
26 Net premium tax credit. If line 24 is greater than line 25, subtract line 25 from line 24. Enter the difference here and
on Schedule 5 (Form 1040), line 70, or Form 1040NR, line 65. If line 24 equals line 25, enter -0-. Stop here. If line
25 is greater than line 24, leave this line blank and continue to line 27 . . . . . . . . . . . . . 26
Part III Repayment of Excess Advance Payment of the Premium Tax Credit
27 Excess advance payment of PTC. If line 25 is greater than line 24, subtract line 24 from line 25. Enter the difference here 27 655
28 Repayment limitation (see instructions) . . . . . . . . . . . . . . . . . . . . . . 28 775
29 Excess advance premium tax credit repayment. Enter the smaller of line 27 or line 28 here and on Schedule 2
(Form 1040), line 46, or Form 1040NR, line 44 . . . . . . . . . . . . . . . . . . . . 29 655
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 37784Z Form 8962 (2018)
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
192 Chapter 7 – Tax Credits
Comprehensive Problem 1
Credit for Child and Dependent Care Expenses (Schedule 3, Line 49) 600
Comprehensive Problem 2A
Credit for Child and Dependent Care Expenses (Schedule 3, Line 49) 307
Comprehensive Problem 2B
Excess Advance Premium Tax Credit Repayment (Schedule 2, Line 46) 655
© 2019 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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»Jotka teidän ylhäisyytenne antaa minulle», korjasi Blood. »Olen
hyvin kiitollinen, mutta tällä hetkellä, minun täytyy tunnustaa, en voi
ajatella muuta kuin tuota suurta uutista. Se muuttaa kokonaan
maailman. Minun täytyy ensin totuttaa itseni ajattelemaan sitä
sellaisena kuin se nyt on, ennen kuin voin määrätä oman asemani
siinä.»
Kolmaskymmenes luku
»Muskettimiehet keulaan!»
Yhdesneljättä luku
»Ja sillä aikaa», valitti hän amiraalille, »täytyy minun viipyä täällä
tuon hölmömäisen varakuvernöörin poissaolon vuoksi.»
»Tarkoitatteko Bloodia?»
Mutta…»
»Jaa! Siinä ei ole mitään 'muttaa' tällä kertaa. Jos tahdotte, että
teidän menneisyytenne unohtuu ja että teidän tulevaisuutenne on
taattu, niin on teillä nyt siihen mahdollisuus. Ja te ette saa ottaa
asiaa kevytmielisesti joidenkin omenapuiden tai muun kirotun
tyhjänpäiväisen hellämielisyyden vuoksi. Teidän velvollisuutenne on
jäädä tänne, ainakin niin kauaksi aikaa kuin sotaa kestää. Kun sota
on ohi, saatte lähteä Somersetiin viinintekoon tai syntymäsijoillenne
Irlantiin perunoita syömään. Mutta siihen mennessä sopii teille
parhaiten Jamaika ja rommi.»
Tällä kertaa Blood nauroi, mutta hänen silmissään oli yhä vakava
ilme.
Blood hätkähti.
»No hyvä. Minä jätän hänelle kirjeen. Toivon, että hän pitää siitä.»
Kapteeni Blood kävi heti töihinsä käsiksi. Oli paljon touhua ennen
kuin Port Royal oli asianmukaisessa puolustuskunnossa kaiken sen
jälkeen, mitä oli tapahtunut. Hän tarkasti linnoituksen rauniot ja antoi
ohjeita sen uudelleen kuntoonlaittamiseksi, johon oli viipymättä
ryhdyttävä. Sitten hän määräsi kallistettaviksi kolme ranskalaista
alusta, jotta ne taas saataisiin merikuntoisiksi. Ja vihdoin, Lordi
Willoughbyn suostumuksella, hän järjesti merisissiensä asiat ja antoi
heille kymmenennen osan saadusta sotasaaliista sekä jätti heidän
valintansa varaan joko lähteä omille teilleen tai astua Vilhelm-
kuninkaan palvelukseen.
»Se on hyvä», sanoi Blood. »Olen hyvilläni siitä, että hän tulee
ennen kuin lordi Willoughby ennättää lähteä. Käsky on, majuri, että
hänet heti vangitaan, kun hän tulee maihin. Tuokaa hänet sitten
minun luokseni. Hetkinen vielä.» Hän kirjoitti nopeasti pienen
kirjelapun. »Tämä lordi Willoughbylle amiraali van der Kuylenin
lippulaivalla.»
Hän nousi, kun tyttö astui sisään, ja ellei hän ollut yhtä kalpea kuin
tyttökin, niin johtui se vain siitä, että hänen ruskettuneisuutensa esti
sen näkymästä. Hetken vallitsi äänettömyys, kun he seisoivat ja
katsoivat toisiinsa. Sitten tyttö astui eteenpäin ja alkoi vihdoin puhua
epäröiden, epävarmalla äänellä, joka oli niin tavatonta hänen
tyynelle ja vapaalle esiintymiselleen.
»Minä… minä olen iloinen siitä, että teette sen. Ennen kaikkea
iloinen teidän vuoksenne», tyttö ojensi kätensä hänelle.