Question

Joyce, a widow, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during 2017. She uses the standard deduction ($9,350) and qualifies for head-of-household filing status. The personal exemption amount for 2017 is $4,050.

Round all computations to the nearest dollar.

Click to access Earned Income Credit and Phaseout Percentages Table and the tax rates schedules.

a. Calculate the amount, if any, of Joyce's earned income credit.
$

b. During the year, Joyce is offered a new job that has greater future potential than her current job. If she accepts the job offer, her earnings for the year will be $39,000. Determine the increase or decrease in Joyce's net cash flow if she accepts the new job. Use the Tax Rate Schedule when computing her income tax.

	Keeps Old Job			Takes New Job
Tax calculation:
Salary	$33,000			$39,000
Less: standard deduction
Less: personal and dependency exemptions
Taxable income	$			$
Income tax	$			$
Less: earned income credit
Net tax due or refund	$			$
After-tax cash flow:
Salary	$33,000			$39,000
Less: net tax due or add refund
After-tax cash flow	$			$
Net in cash flow	$

Answer 1