Lana made $87,500 in wages in 2018. She is the head of a household with two qualifying children. She made $2000 in contributions to her retirement account. How much did she owe in taxes? (Calculate income tax only, not FICA.)

Tax Breakouts:

Income Taxes

Standard Deduction:

$12,550 for single taxpayers and married taxpayers filing separately

$18,800 for heads of households (single but with dependents)

$25,100 for married taxpayers filing jointly and surviving spouses

Common Tax Credits (simplified):

• Child Tax Credit: $3000 per qualifying child (this does get phased out for higher-income families, but we’ll ignore that here)

• Earned Income Tax Credit: If you have earned income through wages or self-employment:

 o Credit of $6728, if you have 3 or more qualifying children and AGI, is under $51,464 (or $57,414 if you’re married filing jointly)

o Credit of $5980, if you have 2 qualifying children and AGI, is under $47,915 (or $53,865 if you’re married filing jointly)

o Credit of $3618, if you have 1 qualifying child and AGI, is under $42,158 (or $48,108 if you’re married filing jointly)

o Credit of $1502, if you have no children and AGI, is under $21,430 (or $27,380 if you’re married filing jointly)

o 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 years of college if AGI is under $90,000 (or $180,000 if married filing jointly).

Heads of Household:

$54,201 - $86,350------($6,220 + 22% of the amount over $54,200)

$86,351 - $164,900-----($13,293 + 24% of the amount over $86,350)

Answer rating: 100% (QA)

As per the Calculations the Lana does not owe any taxes ... View the full answer