90.2K

Verified Solution

Link Copied!

Assume that the tax law allows individuals to claim an itemized deduction for the cost of music lessons for the taxpayer or any member of his family. Instead of this deduction, individuals may claim the first $$1,000$ of the cost as a nonrefundable tax credit $($no carryforward or carryback of any excess credit$).$ In each of the following situations, advise the taxpayer as to whether she should take the deduction or credit. In each situation the taxpayer is single. Assume the taxable year is $2023.$ Use$$Individual Tax Rate Schedules$$and$$Standard Deduction Table.

Required:

Compute Ms$.$ Margo$$s additional tax savings if she elects to take the credit and her additional tax savings if she elects the deduction. She has $$92,000$ AGI. Before consideration of the $$5,000$ cost of her music lessons, she has no itemized deductions.

Compute Ms$.$ Nelson$$s additional tax savings if she elects to take the credit and her additional tax savings if she elects the deduction. She has $$42,000$ AGI. Before consideration of the $$5,000$ cost of her music lessons, she has $$14,000$ itemized deductions.

Compute Ms$.$ Omar$$s additional tax savings if she elects to take the credit and her additional tax savings if she elects the deduction. She has $$225,000$ AGI. Before consideration of the $$5,000$ cost of her music lessons, she has $$13,200$ itemized deductions. Assume that the tax law allows individuals to claim an itemized deduction for the cost of music lessons for the taxpayer or any member of his family. Instead of this deduction, individuals may claim the first $\backslash (\backslash$$ $1,000\backslash )$ of the cost as a nonrefundable tax credit $($no carryforward or carryback of any excess credit$).$ In each of the following situations, advise the taxpayer as to whether she should take the deduction or credit. In each situation the taxpayer is single. Assume the taxable year is $2023.$ Use Individual Tax Rate Schedules and Standard Deduction Table.

Required:

a$.$ Compute Ms$.$ Margo's additional tax savings if she elects to take the credit and her additional tax savings if she elects the deduction. She has $\backslash (\backslash$$ $92,000\backslash$mathrm$\{$AGI$\}\backslash ).$ Before consideration of the $\backslash (\backslash$$ $5,000\backslash )$ cost of her music lessons, she has no itemized deductions.

b$.$ Compute Ms$.$ Nelson's additional tax savings if she elects to take the credit and her additional tax savings if she elects the deduction. She has $\backslash (\backslash$$ $42,000\backslash$mathrm$\{$AGI$\}\backslash ).$ Before consideration of the $\backslash (\backslash$$ $5,000\backslash )$ cost of her music lessons, she has $\backslash (\backslash$$ $14,000\backslash )$ itemized deductions.

c$.$ Compute Ms$.$ Omar's additional tax savings if she elects to take the credit and her additional tax savings if she elects the deduction. She has $\backslash (\backslash$$ $225,000\backslash$mathrm$\{$AGI$\}\backslash ).$ Before consideration of the $\backslash (\backslash$$ $5,000\backslash )$ cost of her music lessons, she has $\backslash (\backslash$$ $13,200\backslash )$ itemized deductions.

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Compute Ms$.$ Omar's additional tax savings if she elects to take the credit and her additional tax savings if she elects the deduction. She has $\backslash (\backslash$$ $225,000\backslash )$ AGI. Before consideration of the $\backslash (\backslash$$ $5,000\backslash )$ cost of her music lessons, she has $\backslash (\backslash$$ $13,200\backslash )$ itemized deductions.

Answer & Explanation Solved by verified expert

See Answer