Part 1: Carrie and Jeremy Snow are married with 2 children Amy (7 years old) and John (3 years old). Jeremy teaches accounting at the local community college and earns $50,500 per year. Carrie is a full-time student obtaining her master’s degree in Accounting. Assume their AGI is $50,500. Answer the following questions based upon the above data:
- Jeremy paid the day care center $5,200 to watch John during his work hours and when Carrie is at school. Calculate the maximum childcare credit allowed for Mr. and Mrs. Snow.
2.Carrie’s tuition for the year totaled $15,000. Her books were $250. This is her first year of graduate school. Which education credit can Carrie take?
- How much can the Snow’s deduct for the education credit?
Part 2: Mr. and Mrs. Johnson are a happy couple filing together with 2 children. Their taxable income is $200,350 and they completed their schedule A with $63,000 in itemized deductions (medical expenses $5,000, taxes $8,000, mortgage interest $20,000, and charitable contributions $30,000). After further review, they were confused on whether or not they needed to pay AMT. They have contacted you for help with the below calculations for AMT.
Tax table
2018 Tax Rate
Married Filing Jointly
10%
$0-19,500
12%
$19,051-77,400
22%
$77,401-165,000
24%
$165,001-315,000
32%
$315,001-400,000
35%
$400,001-600,000
37%
$600,001+
Calculate regular tax rounded to the nearest dollar.
What is the AMT income?
What is the AMT exemption amount?
What is the tentative minimum tax?
Which tax will the Johnson’s pay? The regular tax or AMT?
Sample Solution
