I don’t understand this Accounting question and need help to study.
This practical application requires you to compute various refundable and nonrefundable tax credits available to individual taxpayers and report the resulting credit amounts using the applicable tax forms.
Source document information represents official records that are needed to complete your individual income tax return (e.g. Form W-2). Source documents are mailed to you and the Internal Revenue Service.
- By Sunday at 11:59 P.M., CT.
John and Mary Remington are married and have four sons named Dean, Sam, Cass and Crowley who all are properly included as dependents on John and Mary’s jointly filed tax return.
John and Mary have completed their 2018 Form 1040 through Line 11; they calculated a tax liability of $14,099 before considering any available refundable and nonrefundable tax credits. John earned $30,000 of the couple’s $125,000 adjusted gross income, with Mary earning the remaining $95,000. The federal income tax withheld from their paychecks in 2018 totalled $6,200.
Dean and Sam both attended college as full-time students in 2018 – Dean is in graduate school and Sam just finished his first semester as a college freshman. John and Mary cover the cost of their tuition, and both boys received a 2018 Form 1098-T.
Cass and Crowley are 8-year-old twins. John and Mary paid $7,200 in child care expenses in 2018 ($3,600 per twin).
John and Mary would like you to help them compute their allowable tax credits and complete their Form 1040 with any supporting forms/schedules.
- Prepare Form 2441
- Download and .
- Complete Lines 3 – 11 of Form 2441 using the case information provided above.
- Complete the Form 2441 Credit Limit Worksheet and enter the result on Form 2441, Line 10.
- Prepare Form 8863
- Download , , and .
- Complete Lines 27 – 31 of Form 8863 Part III for Dean and Sam (use the “2nd student” file for Sam) by referencing the Form 1098-T source documents.
- Complete Lines 1 – 19 of Form 8863 Parts I and II using the case information provided above.
- Complete the Form 8863 Credit Limit Worksheet and enter the result on Form 8863, Line 19.
- Prepare Schedule 3
- Download .
- Complete Lines 48 – 55 of Schedule 3 using the applicable amounts from Form 2441 and Form 8863.
- Prepare Form 1040, Lines 12 – 22
- Download and .
- Complete the credit limit worksheet using the information provided in the Dependents section of Form 1040, Pg. 1 and input the result on Form 1040, Line 12a. Add the amount on Line 12a to the amount on Schedule 3, Line 55 and input the result on Form 1040, Line 12.
- Input the appropriate amount on Form 1040, Line 16 using the case information provided above.
- Input any refundable credits from Form 8863 on the correct line of Form 1040.
- Compute all applicable subtotals on Lines 12 – 18.
- Enter either the amount overpaid on Line 19 or the amount owed on Line 22.
- Submit the four completed tax forms (including Form 8863 Part III for the “2nd student”).
Please let me know if you cannot download the files. Work is due Saturday before 10:59pm