Ralph and Kathy Gump are married with one 20-year-old dependent child. Ralph expects to earn $98,000 (paid monthly) and estimates their itemized deductions to be $29,500 for the year. Kathy expects to earn wages of $54,000. The Gumps expect to have for AGI deductions of $3,600.Use Form W-4 and worksheet to determine what Ralph should report on lines 3, 4(a), 4(b), and 4(c) of Form W-4.The amount from the table on page 4 of the instructions regarding two jobs is $8,420.If you choose the option in Step 2(b) on Form W-4, complete this worksheet (which calculates the total extra tax for all jobs) on only ONE Form W-4. Withholding will be most accurate if you complete the worksheet and enter the result on the Form W-4 for the highest paying job.Note: If more than one job has annual wages of more than $120,000 or there are more than three jobs, see Pub. 505 for additional tables; or, you can use the online withholding estimator at www.irs.gov/W4App.1Two jobs. If you have two jobs or you're married filing jointly and you and your spouse each have one job, find the amount from the appropriate table on page 4. Using the "Higher Paying Job" row and the "Lower Paying Job" column, find the value at the intersection of the two household salaries and enter that value on line 1. Then, skip to line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1$ fill in the blank 102Three jobs. If you and/or your spouse have three jobs at the same time, complete lines 2a, 2b, and 2c below. Otherwise, skip to line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Find the amount from the appropriate table on page 4 using the annual wages from the highest paying job in the "Higher Paying Job" row and the annual wages for your next highest paying job in the "Lower Paying Job" column. Find the value at the intersection of the two household salaries and enter that value on line 2a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2a$ Add the annual wages of the two highest paying jobs from line 2a together and use the total as the wages in the "Higher Paying Job" row and use the annual wages for your third job in the "Lower Paying Job" column to find the amount from the appropriate table on page 4 and enter this amount on line 2b2b$ Add the amounts from lines 2a and 2b and enter the result on line 2c . . . . . . . . . . . . . . . . . . . . . . . .2c$3Enter the number of pay periods per year for the highest paying job. For example, if that job pays weekly, enter 52; if it pays every other week, enter 26; if it pays monthly, enter 12, etc. . . . . . . . . . . . . . . . . . .3$ fill in the blank 114Divide the annual amount on line 1 or line 2c by the number of pay periods on line 3. Enter this amount here and in Step 4(c) of Form W-4 for the highest paying job (along with any other additional amount you want withheld) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4$ fill in the blank 12 Step 4(b)—Deductions Worksheet (Keep for your records.) 1Enter an estimate of your 2020 itemized deductions (from Schedule A (Form 1040 or 1040-SR)). Such deductions may include qualifying home mortgage interest, charitable contributions, state and local taxes (up to $10,000), and medical expenses in excess of 7.5% of your income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1$ fill in the blank 13 {• $24,800 if you're married filing jointly or qualifying widow(er)• $18,650 if you're head of household• $12,400 if you're single or married filing separately} 2Enter:. . . . . . . . . . . . . . . . . . . . . . .2$ fill in the blank 14 3If line 1 is greater than line 2, subtract line 2 from line 1. If line 2 is greater than line 1, enter "-0-" . . . . . . . .3$ fill in the blank 154Enter an estimate of your student loan interest, deductible IRA contributions, and certain other adjustments (from Part II of Schedule 1 (Form 1040 or 1040-SR)). See Pub. 505 for more information . . . . . . . . . . . . . . .4$ fill in the blank 165Add lines 3 and 4. Enter the result here and in Step 4(b) of Form W-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .5$ fill in the blank 17

Deduction - An item that can be deducted from taxable income to lower the balance due is known as a…

Answered: and Kathy Gump are married with one…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ralph and Kathy Gump are married with one 20-year-old dependent child. Ralph expects to earn $98,000 (paid monthly) and estimates their itemized deductions to be $29,500 for the year. Kathy expects to earn wages of $54,000. The Gumps expect to have for AGI deductions of $3,600.

Use Form W-4 and worksheet to determine what Ralph should report on lines 3, 4(a), 4(b), and 4(c) of Form W-4.

The amount from the table on page 4 of the instructions regarding two jobs is $8,420.

If you choose the option in Step 2(b) on Form W-4, complete this worksheet (which calculates the total extra tax for all jobs) on only ONE Form W-4. Withholding will be most accurate if you complete the worksheet and enter the result on the Form W-4 for the highest paying job. Note: If more than one job has annual wages of more than $120,000 or there are more than three jobs, see Pub. 505 for additional tables; or, you can use the online withholding estimator at www.irs.gov/W4App.
1	Two jobs. If you have two jobs or you're married filing jointly and you and your spouse each have one job, find the amount from the appropriate table on page 4. Using the "Higher Paying Job" row and the "Lower Paying Job" column, find the value at the intersection of the two household salaries and enter that value on line 1. Then, skip to line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1	$ fill in the blank 10
2	Three jobs. If you and/or your spouse have three jobs at the same time, complete lines 2a, 2b, and 2c below. Otherwise, skip to line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	Find the amount from the appropriate table on page 4 using the annual wages from the highest paying job in the "Higher Paying Job" row and the annual wages for your next highest paying job in the "Lower Paying Job" column. Find the value at the intersection of the two household salaries and enter that value on line 2a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2a	$
	Add the annual wages of the two highest paying jobs from line 2a together and use the total as the wages in the "Higher Paying Job" row and use the annual wages for your third job in the "Lower Paying Job" column to find the amount from the appropriate table on page 4 and enter this amount on line 2b	2b	$
	Add the amounts from lines 2a and 2b and enter the result on line 2c . . . . . . . . . . . . . . . . . . . . . . . .	2c	$
3	Enter the number of pay periods per year for the highest paying job. For example, if that job pays weekly, enter 52; if it pays every other week, enter 26; if it pays monthly, enter 12, etc. . . . . . . . . . . . . . . . . . .	3	$ fill in the blank 11
4	Divide the annual amount on line 1 or line 2c by the number of pay periods on line 3. Enter this amount here and in Step 4(c) of Form W-4 for the highest paying job (along with any other additional amount you want withheld) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4	$ fill in the blank 12

Step 4(b)—Deductions Worksheet (Keep for your records.)

1	Enter an estimate of your 2020 itemized deductions (from Schedule A (Form 1040 or 1040-SR)). Such deductions may include qualifying home mortgage interest, charitable contributions, state and local taxes (up to $10,000), and medical expenses in excess of 7.5% of your income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1	$ fill in the blank 13
		{	• $24,800 if you're married filing jointly or qualifying widow(er) • $18,650 if you're head of household • $12,400 if you're single or married filing separately	}
2	Enter:	. . . . . . . . . . . . . . . . . . . . . . .	2	$ fill in the blank 14

3	If line 1 is greater than line 2, subtract line 2 from line 1. If line 2 is greater than line 1, enter "-0-" . . . . . . . .	3	$ fill in the blank 15
4	Enter an estimate of your student loan interest, deductible IRA contributions, and certain other adjustments (from Part II of Schedule 1 (Form 1040 or 1040-SR)). See Pub. 505 for more information . . . . . . . . . . . . . . .	4	$ fill in the blank 16
5	Add lines 3 and 4. Enter the result here and in Step 4(b) of Form W-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .	5	$ fill in the blank 17

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