Daniel Chen graduated from college in 2008 and began work as a systems analyst i
ID: 2681660 • Letter: D
Question
Daniel Chen graduated from college in 2008 and began work as a systems analyst in July 2008. He is preparing to file his income tax return for 2008 and has collected the following financial information for calendar year 2008: Tuition, scholarships, and grants $5,750 Scholarship, room, and board 1,850 Salary 30,250 Interest income 185 Deductible expenses, total 3,000 Income taxes withheld 2,600 Prepare Daniel's 2008 tax return, using a $5,450 standard deduction, a personal exemption of $3,500, and the tax rates given in Exhibit 3.3. Which tax form should Daniel use, and why? EXHIBIT 3.3 ??? Sample Tax Rate Schedules Tax rates levied on personal income vary with the amount of reported taxable income and the taxpayer's filing status. 2008 Tax Rate Schedules Schedule X-If your filing status is Single If your taxable income is: The tax is: Over- But not over- of the amount over- 0 $8,025 _ _ _ _ _10% $0 8,025 32,550 $802.50 + 15% 8,025 32,550 78,850 4,481.25 + 25% 32,550 78,850 164,550 16,056.25 + 28% 78,850 164,550 357,700 40,052.25 + 33% 164,550 357,700 _ _ _ _ _ 103,791.75 + 35% 357,700 Prepare Daniel's 2008 tax return using the data in part a along with the following information: IRA contribution $5,000 Cash dividends received 150 Which tax form should he use in this case? Why?Explanation / Answer
Tax is imposition financial charge or other levy upon a taxpayer by a state or other the functional equivalent of the state. How many Types of Taxes are there and what are they? There are two types of Taxes in India – 1.Direct Taxes, 2.Indirect Taxes The Taxes whose burden falls directly on the Tax payers are the Direct Taxes like Income Tax, Wealth Tax etc., The taxes in which the burden is passed on to a third party are called Indirect Taxes like Service Tax, VAT etc., What is Income Tax? An income tax is a tax levied on the financial income of persons, corporations, or other legal entities. Tuition, scholarships, and grants =$5,750 Scholarship, room, and board =$1,850 Salary =$30,250 Standard deduction=$5,450 Deductible expenses=$185 Total Income taxes =$3,000 Tax Witheld=$2,600 Personal exemption =$3,500 Taxable Income=$30250 Tax=10% of $30250=$3025 Individual Retirement Arrangement (IRA) is a form of retirement plan that provides tax advantages for retirement savings in the United States. Non deductible IRA=$5000 So tax will be levied on $25000 =10% of $25000 =$250
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