Individual Income Taxes
Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 10, Problem 3DQ
To determine

Explain the difference for the medical treatment expenses including in the tax returns.

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Net pay refers to the amount of take-home pay after taxes and other deductions (healthcare, social security, retirement, etc.).  For the purposes of this project we will assume everyone is an unmarried individual with no children.  We will assume your net salary is simply your gross salary($123,031) minus your taxes (that you will calculate using the table below) and all of your gross salary will be considered taxable income.  Find your net pay. Show all calculations, including descriptions if necessary.  Be sure to use the equation editor and label your final solution.  Round your solution to the nearest dollar.
Credits and deductions both reduce your tax bill, but they work differently. A credit erases money from the amount you owe. You save the full amount. A deduction reduces your taxable income ONLY IF you itemize deductions. You save a percentage of the deduction depending on your tax bracket. If you don't itemize, it's worthless. Example: Josie is in the 25% tax bracket and itemizes her deductions. She qualifies for a $500 credit for her new insulated windows, and also a $500 deduction for mortgage interest. - Credit: Josie saves the full $500 - Deduction: Josie's taxable income is reduced by $500. If she had to pay tax on that $500 she would pay 25% of $500 = $125, so she saves $125. How much more does the credit save Josie than the deduction?
Margaret's tax return is prepared, but she does non have the money to pay the amount due.  She should?

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Individual Income Taxes

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