Asked by Sarah Gascon on May 12, 2024
Verified
The following is a listing of tax considerations for a family. How much is the their taxable income?
A) $36,800
B) $23,200
C) $27,300
D) $24,800
Taxable Income
The amount of income used to calculate how much the government can tax an individual or a company, after all deductions and exemptions have been factored in.
Tax Considerations
Factors related to taxation that must be taken into account when making investment or business decisions.
- Familiarize yourself with the elements of financial statements and their consequence.
Verified Answer
OH
Odobor HeartMay 14, 2024
Final Answer :
C
Explanation :
To calculate taxable income, we need to subtract the total deductions from total income. From the given information:
- Total income: $33,000
- Deductions (standard for married filing jointly): $5,700
- Deductions for 2 dependents (assuming they meet the requirements): $2,000 x 2 = $4,000
Taxable income = $33,000 - ($5,700 + $4,000) = $23,300
However, there is an additional child tax credit of $6,000 (assuming they meet the requirements), which reduces the taxable income further to $23,300 - $6,000 = $17,300.
But the child tax credit can only reduce taxes owed to $0, so the remaining amount of the credit is not refundable. This means that the family's taxable income can't be reduced below $17,300, and they will owe tax on at least that amount.
Therefore, the taxable income for this family is $27,300 (the sum of $17,300 and the non-refundable child tax credit of $6,000). Choice C is the correct answer.
- Total income: $33,000
- Deductions (standard for married filing jointly): $5,700
- Deductions for 2 dependents (assuming they meet the requirements): $2,000 x 2 = $4,000
Taxable income = $33,000 - ($5,700 + $4,000) = $23,300
However, there is an additional child tax credit of $6,000 (assuming they meet the requirements), which reduces the taxable income further to $23,300 - $6,000 = $17,300.
But the child tax credit can only reduce taxes owed to $0, so the remaining amount of the credit is not refundable. This means that the family's taxable income can't be reduced below $17,300, and they will owe tax on at least that amount.
Therefore, the taxable income for this family is $27,300 (the sum of $17,300 and the non-refundable child tax credit of $6,000). Choice C is the correct answer.
Learning Objectives
- Familiarize yourself with the elements of financial statements and their consequence.