Joyce, a single parent, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during 2023. She uses the standard deduction and files as a head of household. 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. 2,696 X 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 $40,400; however, she is afraid she will not qualify for the earned income credit. Determine the increase or decrease in Joyce's net cash flow if she accepts the new job. Since the child tax credit will be the same under either scenario, you can ignore it for purposes of this analysis. Use the Tax Rate Schedule when computing her income tax. Tax calculation: Salary Less: Standard deduction Taxable income Income tax Less: Earned income credit Net tax due or refund After-tax cash flow: Salary Less: Net tax due or Add refund After-tax cash flow Net in cash flow if accept new job ta Keeps Old Job $33,000 13,850 X Takes New Job $40,400 $33,000 $40,400
Joyce, a single parent, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during 2023. She uses the standard deduction and files as a head of household. 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. 2,696 X 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 $40,400; however, she is afraid she will not qualify for the earned income credit. Determine the increase or decrease in Joyce's net cash flow if she accepts the new job. Since the child tax credit will be the same under either scenario, you can ignore it for purposes of this analysis. Use the Tax Rate Schedule when computing her income tax. Tax calculation: Salary Less: Standard deduction Taxable income Income tax Less: Earned income credit Net tax due or refund After-tax cash flow: Salary Less: Net tax due or Add refund After-tax cash flow Net in cash flow if accept new job ta Keeps Old Job $33,000 13,850 X Takes New Job $40,400 $33,000 $40,400
Chapter12: Tax Credits And Payments
Section: Chapter Questions
Problem 28P
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Question
Transcribed Image Text:Joyce, a single parent, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during
2023. She uses the standard deduction and files as a head of household.
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.
2,696 X
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 $40,400; however, she is afraid she will not qualify for the earned income credit. Determine the increase or
decrease in Joyce's net cash flow if she accepts the new job. Since the child tax credit will be the same under either scenario, you can
ignore it for purposes of this analysis. Use the Tax Rate Schedule when computing her income tax.
Tax calculation:
Salary
Less: Standard deduction
Taxable income
Income tax
Less: Earned income credit
Net tax due or refund
After-tax cash flow:
Salary
Less: Net tax due or Add refund
After-tax cash flow
Net
in cash flow
if accept new job
ta
Keeps
Old Job
$33,000
13,850 X
Takes
New Job
$40,400
$33,000
$40,400
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