BUS FPX 4065 Assessment 5 Tax Credits on 1040 to Reduce Tax Liability

Student Name

Capella University

BUS-FPX4065 Income Tax Concepts and Strategies

Prof. Name

Date

Schedule A

The Schedule A tax form is utilized to determine whether a taxpayer should opt for the standard tax deduction or qualify for itemized tax deductions. In the case of the Weavers, their previous assessment indicated eligibility for itemized deductions.

Schedule 1

Schedule 1 aids in calculating additional income adjustments for taxpayers. Examples include income from sources such as gambling, unemployment, alimony, etc. Adjustments are reported on line 10 of the 1040 form. Additionally, Mr. and Mrs. Weaver must include business income from Schedule C and self-employment tax deductions from Schedule SE.

Schedule 3

Schedule 3 determines additional credits and payments made by the taxpayer. The Weavers utilized child tax credits and dependent care expenses, reported on lines 13, 14, and 15 of Form 2241, which then transferred to line 31 of the 1040 form.

Form 2441

Form 2441 assists in determining child care credits. The Weavers paid $5,800 for child care expenses for Ashley and Patrick. After calculations, they can claim $2,320 for the year 2021, reported on line 13g of Schedule 3.

Form 8863

Form 8863 calculates credits for higher education payments. Mrs. Weaver’s tuition and fees totaled $6,011 for 2021. However, they do not qualify for educational tax credits due to exceeding the AGI threshold.

Form 1040

After inputting information from various forms, taxable income and taxes due are calculated on Form 1040. The Weavers owe $132,553 for the year 2021.

Conclusion

Tax obligations vary based on individual circumstances. Completing tax returns involves various forms and calculations, with results influencing future financial decisions.

References

Internal Revenue Service. (n.d.). Forms and Publications (by Tax Type). https://www.irs.gov/forms-instructions

BUS FPX 4065 Assessment 5 Tax Credits on 1040 to Reduce Tax Liability