In this paper I will identify the reason why Jackson and Kara Erb will not receive a refund from the prior year, how their refund and taxes due were calculated, as well as why they were not subject to the alternate minimum tax (AMT). These aspects will be answered from information provide as well as from the scenario presented between a Tax Accountant Peggy Sue as she explains to her new clients Jackson and Kara Erb by utilizing the class textbook, lessons, and other reputable sources.
Not until further review of the client’s prior year W-2 and entering all pertinent information within the appropriate tax form 1040 as required, will I reach a conclusion and determined that a refund will be distributed to Jackson and Kara Erb. Their refund and …show more content…
Since this was his only income line 8a through line 21 were left blank, combing the total income the result was $12,562 on line 22. Second, the Adjusted Gross Income (AGI) section, through examination no credits available to list line 23 through line 36 were also left blank, line 37 of this section resulted in a total of $12,562. Third, within the taxes and credits section line 38 total was transferred from line 37 total, there was one standard deduction that Jackson Erb fell into and that was filing jointly the deduction total was $12,600 in which the computation for line 41 resulted in a negative number thus a zero was entered. Last step was to subtract exemption amount which I found to result in zero from the information provided. Thus the end result is an eligible refund amount totaling $1,397 will be distributed.
Jackson Erb inquired if he was subject to the alternative minimum tax (AMT), after reviewing his information I have determined that he is not. Per the text “Individual AMT is based on AMTI in excess of an exemption amount.” (Jones, p.443) The exemption amount for Jackson Erb scenario “Married filing jointly” is $83,800. Alternative minimum tax income threshold is $159,700, and the Alternative minimum tax income maximum is $494,900. In conclusion Jackson Erb did not fall into this exemption as inquired
Not until further review of the client’s prior year W-2 and entering all pertinent information within the appropriate tax form 1040 as required, will I reach a conclusion and determined that a refund will be distributed to Jackson and Kara Erb. Their refund and …show more content…
Since this was his only income line 8a through line 21 were left blank, combing the total income the result was $12,562 on line 22. Second, the Adjusted Gross Income (AGI) section, through examination no credits available to list line 23 through line 36 were also left blank, line 37 of this section resulted in a total of $12,562. Third, within the taxes and credits section line 38 total was transferred from line 37 total, there was one standard deduction that Jackson Erb fell into and that was filing jointly the deduction total was $12,600 in which the computation for line 41 resulted in a negative number thus a zero was entered. Last step was to subtract exemption amount which I found to result in zero from the information provided. Thus the end result is an eligible refund amount totaling $1,397 will be distributed.
Jackson Erb inquired if he was subject to the alternative minimum tax (AMT), after reviewing his information I have determined that he is not. Per the text “Individual AMT is based on AMTI in excess of an exemption amount.” (Jones, p.443) The exemption amount for Jackson Erb scenario “Married filing jointly” is $83,800. Alternative minimum tax income threshold is $159,700, and the Alternative minimum tax income maximum is $494,900. In conclusion Jackson Erb did not fall into this exemption as inquired