Question

Can someone hel me with this federal income tax question please.

What is the best filing status in general, for the following scenarios? Provide explanation plese.

1. Mike is a 25 years old person who recently graduate from College in May 2020. In August 2020, Anderson started working for Google and received an annual salary of $55k.

2. James get married in Jan 2020. By August 2020, James found out that his wife is having an affair with her ex-boyfriend. For that reason, James start filing for a divorce in late August. Due to the lengthy litigation procedure, James is still on documents married in year end of 2020, even though the two are not living together anymore. James know that his wife is in a financially messed up situation. For that reason, he wants to be as financially separated from her as much as possible.

3. Anna is a single mom who is living with her 4 years old son in an apartment in Houston. She has been single and taking care for her son for 4 years already since he was born in 2016. Being a single mom is not easy, Anna not only have to pay the monthly rental, utilities, etc. for the apartment, but she also must pay the monthly childcare cost of $1000/month.

For each of the scenario above, without any further information, point out any potential income tax credits that the person could possibly get. If no credit can be claimed, write “NO clear potential credit based on the information provided”. If you need to assume something in order to claim a credit, write down your assumption as well.

Thank you.

Answer 1

Mike anderson: annual salary $55k-tax filing status is active, he has to file return and pay taxes, it will be either by himself through form w-2 plus he falls in the bracket of 22%(for income between $4126-$85525) or if he had filled form w-4, with-helding taxes as per IRS, in time filing of return is required, tax credit available upto $2000

James, if filing combined return can claim for upto $2000 tax credits and $12400 deduction each=$24800

Anna can claim child care expense upto $3000 per year per child max 2 children, it also depends on AGI Bracket , 20-35% of the child care cost can be claimed as credits