• In 2020, Adam, your brother in law, has the following items below. Adam is not sure how much tax refund that he will receive so he asks you, an accounting student to help him with estimating his tax refund. Use the tax calculation spreadsheet to help Adam figure out his refund for 2020.
• Salary: $70k
• Income from his Airbnb rental: $10k
• Tax withheld in 2020 (Prepayment): $15,400
• Adam has a total itemized deduction of $200 (from his Goodwill’s donation)
  
• Adam is married and has 1 child who is qualify for a $2000 child tax credit.
  Adam’s wife (your sister) is a stay at home mom and do not have any source of income in 2020.

• For this question, you need to use the Tax calculation worksheet and look up the needed tax rate and deduction info. Below is my suggestion on steps to handle this tax problem.

Step 1: Decide Adam’s filing status.

Step 2: Base on the filing status, look up the info regarding Tax rate and Standard deduction on the Tax info 2020 tab

Step 3: Fill that info from step 2 into the correct row in the IC tax basis formula tab

Step 4: Fill the rest of the info Adam give you into the IC tax basis formula tab. 

Tax basis formula:

Tax info 2020:

Transcribed Image Text:

B D Gross Income 50,000 (-) Adjustments (Above the Line deductions) Adjusted Gross Income (AGI) (-) 50,000 From AGI deduction: $ 12,700 Greater of (a) Standard deduction OR $ (b) Itemized deduction $ 12,500 500 Deduction for Qual. Business Income $ 200 (x) Taxable Income 37,300 Тах гate 0.12 () Income tax liability (-) 4,476 Credit Prepayment $ Tax due or (Tax refund) $ 6,000 (1,524) IC Tax basic formula Tax info 2020 Sheet3 + B D Gross Income 50,000 (-) Adjustments (Above the Line deductions) Adjusted Gross Income (AGI) (-) 50,000 From AGI deduction: $ 12,700 Greater of (a) Standard deduction OR $ (b) Itemized deduction $ 12,500 500 Deduction for Qual. Business Income $ 200 (x) Taxable Income 37,300 Тах гate 0.12 () Income tax liability (-) 4,476 Credit Prepayment $ Tax due or (Tax refund) $ 6,000 (1,524) IC Tax basic formula Tax info 2020 Sheet3 +

Answer rating: 100% (QA)

Adsms Tax Brackets and tax Calculation Statements are below ... View the full answer