## Answers

Ans D

Expenses | Deduction | Amount of Deduction |

1. Student loan interest paid. | can claim deduction | $ 1,000 |

2. Books. | can claim deduction | $ 1000 |

3. Rent | cannot claim deduction | $ 8,000 |

Total | $ 10,000 |

So, Total Deduction is $ 1,000 + $ 1000= $ 2000

ans E)

Income Items | Inclusion/Exclusion | Amount |

1. Wages. | Included in gross income | $ 30,000 |

2. Employer-provided tuition assistance. | Excluded in gross income | $ 5000 |

3. Scholarship. | Excluded in gross income | $ 2,000 |

4. Student loan proceeds | Included in gross income | $ 5000 |

Total | $ 42000 |

So, Total gross income is $ 30000 + $ 5000= $ 35000

Tarek's tax liability using form 1040

Gross Total Income= Total Gross Income - Total Deduction

=$ 35000 - $ 2000

=$ 33000

Here, Federal income taxes withheld $ 4,000. So. total tax liability is

=Total Gross Income - Standard Deduction

=$ 33000 - $ 12,400

= $ 20600

(here standard deduction for single taxpayer for the year 2020 is $ 12400

Therefor, Total Tax Liability as per the tax bracket for $ 20600 is = ($ 987.5 + 1286.88) = 2274.38

So, Total tax liability is $ 2,274.38 and federal income taxes withheld is $ 4,000.

Hence, Total Tax Refund = Advanced Tax - Total tax liability

=$ 4,000- $ 2,274.38

= $ 1, 725.62

here

TAX RATE | SINGLE | total tax |
---|---|---|

10% | $0 to $9,875 | $ 987.5 |

12% | $9,876 to $20600= 10724 | $ 1286.88 |

Total | $ 2274.38 |

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