bby, age 32, can do it all. She works 30 hours a week at her daytime job as 6. L
ID: 2332594 • Letter: B
Question
bby, age 32, can do it all. She works 30 hours a week at her daytime job as 6. Li the county. She also freelances as an editor and ghost writer. Her gross pay tro for job is $ purchased account (also through the cafeteria plan), and contributes $1,500 to her employer's 4 The county times Libby' recently copy-edited a local photographer's website and in exchange the photographer took free pictures of Libby and her family. The pictures and photo shoot session would normally sel for $150. Libby would typically charge $200 for her copyediting services. Jake and his 3 year-old daughter, Jane, live with Libby. Jane is not Libby's daughter, but she thinks of her as her own. Jake loves to surf and teaches surfing lessons when he is not watching his daughter Jane. Jake makes cash income from his surf lessons but has to pay a sitter for Jane so he can teach them He made $5,000 (after expenses) last year teaching surf lessons. Using 2018 tax law, what is Libby's 30,000 per year. Out of this she pays $2,000 for health insurance premiums through her employer's cafeteria plan), contributes $3,000 to her health savings also pays for a group term life insurance policy for Libby. The value of s base pay. Libby's freelance work last year generated net income of 5 57(b) plan. the policy is 5 20,000. Libby a. Filing status (3 pts) b. Number of dependents (2 pts) c. Total gross income reported on the tax return (8 pts) d. Adjusted gross income (3 pts) e. Taxable income (2 pts) f. Income tax (3 pts) g. Self-employment tax (3 pts) Please show your work throughout so that partial credit can be given. (Helpful hint: You should use Form 1040 (2017) as a guide in preparing your calculation. You should also complete the tax return using Form 1040 (2017), even though this is just a draft version currently. You will need to use Schedule 1 and Schedule 2 as well as some other schedules.Explanation / Answer
As per Income Tax Act, 1961
a. filing status- Individual
b. Number of dependents = 1, Because own child, step child and legal adopted child consider as dependent.
c. computation of total income:- Income from salary 30000 income from freelance work 20000 income from photo shoot 150 income fro copyediting service 200 Minor child income 0
Gross total Income 50350 d.Less:- Deduction 1. Health insurance (2000) 2. Health saving A/c (3000) 3. COntribution to Employer (1500)
Net Income/Adjusted Income $43850
e. Taxable Income $43850
f. Income tax on $43850= First we should convert $ into Indian currency
Today price 1$=72.1 Rs.
so, 43850*72.1= 3161585
for an Individual:- 0-250000 0 250001-500000 5% tax 12500 500001-1000000 20%tax 100000 1000001-3161585 30%tax 648475.5 total 760975.5 add: Education cess @3% 22829.27 Total Tax 783804.77 in Rs. Total tax 10871.08 in $
Notes: in case of minor child, accodrig to income tax act 1961 if minor child income generated by minor skill than it shall not club with the parent income.
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