Chap3%20HW%20Solutions - 38 CCH Federal Taxation-Basic...

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38 CCH Federal Taxation—Basic Principles ¶3375 Filing Requirements The obligation to file a return depends on the amount of gross income, marital status during the year, and age. Only income which is taxable is included in the computation of gross income in order to determine whether or not a return must be filed. ¶3385 Tax Tables The tax tables are based on taxable income. The tables apply to taxpayers with taxable income of less than $100,000. Separate tables are provided for taxpayers based on their filing category. ¶3395 Tax Rate Schedules The tax rate schedules are used by those taxpayers not eligible to use the tax tables. ¶3405 Self-Employment Tax Individuals with net earnings from self-employment of $400 or more are subject to the tax. The rate for 2005 is 15.3 percent on a maximum of $90,000. A taxpayer is entitled to a deduction from gross income of one-half the self-employment tax. Taxpayers are required to pay social security tax (the ‘‘nanny tax'') on behalf of qualified domestic employees. Generally, the household employer and domestic employee share the burden of the nanny tax. The household employer's share is not deductible unless it can be classified as a business expense. The domestic employee's share is never deductible. ANSWER TO KEYSTONE PROBLEM—CHAPTER 3 (¶3225.) When the opportunity arises to choose which taxpayer is to be given the personal exemption, it should always be given to the taxpayer who will receive the greatest tax savings from the deduction. That may not necessarily be the taxpayer with the highest income since the personal exemption may be phased out for high-income individuals. The tax savings can then be shared among the other taxpayers eligible to take the personal exemption. ANSWERS TO QUESTIONS—CHAPTER 3 Topical List of Questions 1. Tax Formula Components (¶3001) 2. Deductions for and from Adjusted Gross Income (¶3025) 3. Deduction v. Tax Credit (¶3065) 4. Deductions for Adjusted Gross Income Terminology (¶3015) 5. Standard Deduction v. Personal Exemption (¶3035 and ¶3045) 6. Standard v. Itemized Deductions (¶3035) 7. Partial Standard Deduction (¶3035) 8. Standard Deduction for Dependent Child with Unearned Income (¶3365) 9. Spouse Exemption on Separate Return (¶3045) 10. Additional Old Age and Blindness Standard Deduction (¶3035) Chapter 3
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Instructor's Manual 39 11. Dependency Exemption: Support Test (¶3225) 12. Dependency Exemption: Birth and Death (¶3225) 13. Dependency Exemption: Full-Time Students (¶3225) 14. Joint Return of Dependent (¶3225) 15. Multiple Support Agreement: Requirements (¶3225) 16. Multiple Support Agreement: Allowable Exemptions (¶3225) 17. Dependency for Pre-1985 Divorce (¶3225) 18. Dependency for Pre-1985 Divorce (¶3225) 19. Dependency for Post-1984 Divorce (¶3225) 20. Comparing Pre-1985 and Post-1984 Divorce Exemptions (¶3225) 21. Calculating Standard Deduction and Exemptions (¶3035 and ¶3225) 22. Definition of Filing Status (¶3301) 23. Determining Filing Status (¶3301)
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This homework help was uploaded on 04/09/2008 for the course ACCT Acct 308 taught by Professor Lau during the Summer '06 term at CSU Fullerton.

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Chap3%20HW%20Solutions - 38 CCH Federal Taxation-Basic...

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