From the course: Finance Foundations: Income Taxes

Unlock the full course today

Join today to access over 22,600 courses taught by industry experts or purchase this course individually.

Single Form 1040: Additional tax payment or tax refund

Single Form 1040: Additional tax payment or tax refund

From the course: Finance Foundations: Income Taxes

Start my 1-month free trial

Single Form 1040: Additional tax payment or tax refund

“

- Let's review Kay's tax situation. His income is taxed in three tax brackets. For the first $21,300 in income, he doesn't pay any tax at all. This represents the standard deduction amount of $18,000 for people filing as head of household, plus $3,300 he set aside in an Individual Retirement Account, an IRA. individual retirement account, an IRA. So his tax rate is zero percent on that first $21,300 in income. On the next $13,600 he pays a 10% tax rate, a total of $1,360 in tax. The tax rate on Kay's remaining taxable income is 12%. This remaining taxable income is $35,400. That's equal to $67,000, his AGI, minus $18,000 in standard deduction, minus $13,600 in that first tax bracket. This tax is $4,248. That's $35,400 times 0.12. So his total tax is $5,608. That's $1,360 from the first tax bracket, plus $4,248 from the next tax bracket. Now does Kay have anything else going on going on with his tax situation? with his tax situation? Well absolutely. We'll now look at his tax credits…

Contents