   Chapter 18.III, Problem 21RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# As a newly hired IRS trainee, you have been asked to calculate the amount of tax refund or tax owed for the following taxpayers. Tax Tax Other Refund/Owe Name Liability Credits Taxes Payments (circle one) Amount 21. Ellis $5,320$2,110 $325$4,650 Refund/Owe

To determine

To calculate: The amount of tax refund or tax owed of person E if the tax liability is $5,320, tax credits is$2,110 and other taxes is $325 and payments are$4,650.

Explanation

Given Information:

The person E has the tax liability is $5,320, tax credits is$2,110 and other taxes is $325 and payments are$4,650.

Formula used:

The formulas used for the calculation are listed below:

The total tax is calculated by the formula given below:

Total tax=tax liability tax credits + other taxes

To check the amount is tax refund or tax owed. It is needed to see the difference between total payments and total tax. If the tax payments are greater than total taxes, the difference is tax refund and if the tax payments are less than total taxes, the difference is tax owed.

Calculation:

Taxable income is defined as the income to which tax rates are functional in order to discover the total amount of tax payable for the year. Tax credits are the amount of dollar subtracted from the tax liability.

The followings steps are used to calculate

Step 1: The total tax is calculated by the formula given below:

So,

Total tax=tax liability tax credits + other taxes

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