Problem 3-35 (LO. 1, 2, 3, 4, 5, 6)
Charlotte (age 40) is a surviving spouse and provides all of the support of her four minor children (ages 4, 8, 11, and 14) who live with her. She also maintains the household in which her parents live and furnished 60% of their support. Charlotte's father earned $2,400 from a part-time job and received $5,500 of municipal bond interest. Charlotte has a salary of $81,800, a $2,000 loss on the sale of stock, a cash prize of $4,000 from a church raffle, and itemized deductions of $17,200.
Click here to access the Components of the tax formula to use, if required. If an amount is zero, enter "$0".
a. Compute Charlotte's taxable income.
$ 54,600 X
b. Using the Tax Rate Schedules (click here), tax liability (before any allowable credits) for Charlotte is $ 6,088 X for 2025.
c. Compute Charlotte's child and dependent tax credit.
Charlotte's child tax credit is $ 8,000 ✓, of which $ 6,400 X may be refundable and her dependent tax credit is $ 1,000 ✓ of which $ 0 ✓ may be refundable.
Feedback
Check My Work
Taxpayers are allowed to deduct the greater of itemized deductions or the standard deduction. The child tax credit and dependent tax credit are provided to individual taxpayers based on the number of their qualifying children and dependents. The computation of income tax due (or refund) involves applying the proper set of tax rates to taxable income and then adjusting for available credits.