Question

1. Chen, a single taxpayer, had the following income and deductions during 2018: Salary                           &nbsp

1. Chen, a single taxpayer, had the following income and deductions during 2018:

Salary                                                 $55,000

Interest on bank account                           750

Tax-exempt interest                                  500

Deduction for AGI                                5,500

Itemized deductions                           15,000

Taxes withheld                                      5,500

Calculate Chen's tax liability due or refund.

2.

Artimisa's employer pays $8,000 in tuition this year for Artimisa to attend a graduate business program. How much of the employer-provided tuition is taxable to Artimisa?

A) $0

B) $2,750

C) $5,250

D) $8,000

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Homework Answers

Answer #1

Part 1

Gross income (55000+750)

55750

Less: Deductions for AGI

5500

AGI

50250

Less: deductions from AGI (Greater of standard deduction (12000) or itemized deduction (15000)

15000

Taxable income

35250

Tax liability

4039.50 (952.50+(12%*(35250-9525)))

Less: taxes withheld

5500

Tax liability due (refund)

(1460.50)

Therefore,

Chen's tax refund = $1460.50 ($1461 if answer is to be given to 0 decimal places)

Part 2

Answer is option B) $2,750

The employer-provided tuition fees over $5250 is taxable to the employee. Thus, 2750 (8000-5250) is taxable to Artimisa.

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