Tax Research |
Steven King |
ACC 620M |
July 26, 2011 |
John R. Lane
1010 Ipsen St.
Yorba Linda, CA 90102
Dear Mr. Lane:
It is my pleasure to be an accountant to help you calculate your tax return of last year, and thanks for giving this opportunity for me!
You asked me to work out your tax return of last year based on your situation and your income, and expenses last year. In my opinion, I think this is a simple case so that we just need to fill the form 1040.
In reaching this conclusion, I consulted relevant provisions of the Internal Revenue Code (“IRC”), and applicable Treasury Regulations under the IRC.
The facts as I understand them are as follows: you are a single taxpayer, and provided 100% of the ...view middle of the document...
For the income section, we just put $20,000 into line7, which is your salary, $300 into line 8a, which is the taxable interest, and $31,000 into the 16b, which is your pension. Then we can have the total income of your last year, which is $51,000.
Second, we should work out your adjusted gross income. In this part, we just need to put $5,000 into line 32, because you just have IRA deduction in this part. Therefore, the adjusted gross income of you is $46,300.
Third, in the next part, Tax and Credit, besides put the adjusted gross income into line 37, we have to put $8,000 for itemized deduction into line 40, because your itemized deduction is great than standard deduction, which is $5,700. In addition, almost every individual taxpayer is allowed a personal exempting of $3,650, you still have $3,650 can be deducted. However, You cannot claim a dependency exemption for your cousin, even though you provided 100% of him, because cousin do not meet the test of dependency. Therefore, the taxable income of last year is $34,650. According to the 2009 tax table, the tax of last year is $4,856.
At last, to attempt to stimulate the sagging U.S. economy, the American Recovery and Reinvestment Act of 2009 provides a new refundable credit for 2009 and 2010, the Making Work pay credit. Since you have $6,000 for the federal income tax withheld, and $400 for the making work pay credit, the total payments is $6,400. We can use this payment to minus the tax of last year, and then we can have the refund for you, which is $1,544.
Please give me a call at (619)302-5606 if you have any questions about this conclusion, and I’ll be happy to explain anything, which you concern.
Very truly yours,
By: Steven King