Ted Higgins is a single taxpayer with an AGI of $150,000, Taxable income of $90,000 and calculated tax liability of $40,000. During 2020 he worked as an electrician and had $15,000 withheld from his wages for federal income tax and $2,000 for his portion of social security and Medicare taxes. He also made estimated tax payments of $10,000 during the year. He also has a 19 year old Daughter, Sophia, who meets all of the requirements of a qualifying child for dependent purposes. Sophia is a full time student in her junior year at UCR. Ted spends $6,000 on tuition, books and other course materials for Sophia during 2020.

Ted Higgins is a single taxpayer with an AGI of $150,000, Taxable income of $90,000 and calculated tax liability of $40,000. During 2020 he worked as an electrician and had $15,000 withheld from his wages for federal income tax and $2,000 for his portion of social security and Medicare taxes. He also made estimated tax payments of $10,000 during the year. He also has a 19 year old Daughter, Sophia, who meets all of the requirements of a qualifying child for dependent purposes. Sophia is a full time student in her junior year at UCR. Ted spends $6,000 on tuition, books and other course materials for Sophia during 2020.

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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Concept explainers

Tax Deferred Retirement Benefits

It stands for Simplified Employee Pension Individual Retirement Account. This savings plan is for self-employed persons such as independent contractors, freelancers, entrepreneurs, etc. The tax rules of SEP IRA are the same as traditional IRA. Entrepreneurs can also open SEP IRA accounts for their employees and gain a tax advantage. The employees cannot make contributions to these accounts by themselves however they will be taxed upon withdrawal.

Question

What is Ted’s net amount due/ (refunded) for 2020?

Ted Higgins is a single taxpayer with an AGI of $150,000, Taxable income of $90,000 and calculated tax
liability of $40,000. During 2020 he worked as an electrician and had $15,000 withheld from his wages
for federal income tax and $2,000 for his portion of social security and Medicare taxes. He also made
estimated tax payments of $10,000 during the year.
He also has a 19 year old Daughter, Sophia, who meets all of the requirements of a qualifying child for
dependent purposes. Sophia is a full time student in her junior year at UCR. Ted spends $6,000 on tuition,
books and other course materials for Sophia during 2020.

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