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Scenario 1 Using the 2017 tax laws, answer these questions about the following scenarios. Jim (49) and Linda (50) are married and will file a joint return. They have two children, Todd (20), and Traci (15), who both lived with their parents all year. Todd has a part time job and Traci is still in high school. Jim and Linda provide more than 50% support for both children. Jims wages were $26,500; Lindas wages were $16, 500; Todds gross income was $3,100; Traces was $0. Jim, Linda, Todd, and Traci had healthcare coverage through Jims employer. Jim and Linda are not claiming any education or retirement savings contribution credits.

a. What is the sum of Jim and Lindas standard deduction and their exemptions?

b. What is the amount of Jim and Lindas taxable income?

c. What is the amount of Jim and Lindas earned income credit?

Scenario 2 Karla (25) is unmarried and was a full-time student from January through June. Karla worked part-time, but did not provide more than 50% support for herself or her son, Sam (1). Karla and Sam lived with Karlas parents, Ron and Sue, the entire year. Karlas wages were $7,204. Rons wages were $52, 013; Sues wages were $38,750; Sams income was $350. Karla will allow her parents to claim Sam this year. Karla, Sam, Ron, and Sue had health care coverage through Rons employer. Ron and Sue are not claiming any education or retirement savings contributions on their married filing jointly return.

a. What is the sum of Karlas standard deduction and her personal exemptions?

b. What is the sum of Ron and Sues standard deduction and their personal exemptions?

c. What is the amount of Karlas earned income credit?

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