Chapter 4, Problem CC.14Q

Summary Introduction

(a) To determine:

Whether to choose itemize deductions or standard deductions.

Introduction:

Each employee is liable to pay tax, if he or she comes under the tax bracket. A taxpayer gets deductions on some expenses which he spent out of his income. Those deductions are known as tax deductible expenses

Summary Introduction

(b) To explain:

Tax ramification of student loan interest.

Introduction:

Student loan interest is also an expense for a person. A person can claim deduction in taxable amount for student loan interest paid.

Summary Introduction

(c) To calculate:

Social security and Medicare tax amount.

Introduction:

Social security tax is the tax that Employer and employee both have to pay, so that government can run social security program.

Medicare tax implies to employee’s earned income and is used to fund government Medicare program such as subsidized healthcare.

Summary Introduction

(d) To calculate:

The amount of Total federal income tax liability.

Introduction:

Any individual or a company owes some amount for federal government, out of his income. Federal tax liabilities are paid to internal revenue.

Summary Introduction

(e) To determine:

Whether qualified for child tax credit or not and the way it which it will affect the tax liability and will a payment or refund will be determined.

Introduction:

Child tax credit states that a taxpayer can claim tax credit as he holds a dependent child in his family. Child tax credit depends upon the number of dependent child.