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Tax Planning - Income Shifting (Taxable Income/Tax Liability) (LO. 7) Leroy and Amanda are married...

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Accounting

Tax Planning - Income Shifting (Taxable Income/Tax Liability) (LO. 7) Leroy and Amanda are married and have three dependent children. During 2020, they have the following income and expenses:

Salaries $120,000 Interest income 45,000 Royalty income 27,000 Deductions for AGI 3,000 Deductions from AGI 9,000 (Hint: The 2020 standard deduction for married filing jointly is $24,800.) General instructions: (1) Do not round intermediate computations. Round your answers to the nearest dollar. (2) Refer to Appendix D to calculate the following. b. Leroy and Amanda would like to lower their income tax.

How much income tax will they save if they legally shift $5,000 of income to each of their children? Assume that the children have no other income and their income tax rate is 10%. Leroy and Amanda will save $ if they legally transfer $5,000 of interest income to each child.

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