@jim_thompson5910
last two parts! can you please help me?:)

- anonymous

@jim_thompson5910
last two parts! can you please help me?:)

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- jim_thompson5910

ok go for it

- anonymous

##### 1 Attachment

- jim_thompson5910

ok this part is going to use the previous part
what was the taxable income from the last part?

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## More answers

- anonymous

$9,325
:)

- jim_thompson5910

good, where does that number fall? which tax bracket are you in?

- anonymous

the last one?

- jim_thompson5910

see in the first column how it says "if your taxable income is...."

- jim_thompson5910

where does 9,325 fit in?

- anonymous

so we have to "$16,781.25 plus 28% of the excess over $82,400"

- jim_thompson5910

no, look in the first column
tell me which tax bracket 9,325 fits
is it the first tax bracket? second? third? or fourth?

- anonymous

fourth one

- anonymous

oh shoot! no no its the second one ahah

- jim_thompson5910

good catch

- jim_thompson5910

so what is the rule for this bracket?

- anonymous

$837.50 plus 15% of the excess of $8,375

- jim_thompson5910

good

- jim_thompson5910

so first you need to find the difference between 9,325 and 8,375
9325 - 8375 = ???

- anonymous

so 950

- jim_thompson5910

now take 15% of that to get
15% of 950 = 0.15*950 = ???

- anonymous

142.5?

- anonymous

?

- jim_thompson5910

good

- jim_thompson5910

now add that to 837.50

- anonymous

so 980?

- jim_thompson5910

perfect

- jim_thompson5910

that's your tax liability

- jim_thompson5910

that is the official amount you owe to the government
now go back to the witholdings chart
how much did you pay to the government?

- anonymous

1664.52?

- jim_thompson5910

so did you overpay? or underpay? or did you pay the perfect amount?

- anonymous

im not sure how do i know?

- jim_thompson5910

well you paid 1664.52 because the gov withheld this amount
but you really only owe 980

- anonymous

oh so overpay

- jim_thompson5910

yes good

- jim_thompson5910

that means you'll get a refund
the amount of the refund is the difference between what you paid and what you owe

- jim_thompson5910

Tax Refund = (Amount you paid) - (Amount you owe)
Tax Refund = (1664.52 ) - (980)
Tax Refund = 684.52

- jim_thompson5910

If the tax refund is negative, then you still owe the government tax money and you would send this money (probably in the form of a check) along with your filled out tax forms
In this case, the refund is positive, which means they will send you a check after the tax form is processed

- anonymous

so is this all for number 1?

- jim_thompson5910

hmm let me check

- jim_thompson5910

no not quite

- jim_thompson5910

#1 is asking about allowances

- jim_thompson5910

and the federal withholding

- anonymous

how can we figure this out??

- jim_thompson5910

you already did, when you circled the 2 and highlighted the 1664.52

- jim_thompson5910

there are 2 allowances (you and the child), which corresponds to a federal withholding of 1664.52

- anonymous

Oh! okay! ahah so what about number 2?

- jim_thompson5910

#2 is already answered (look above at how we determined if we get a refund or if we still owe tax money)

- anonymous

so what we discussed would be numbers 2 AND 3 actually?

- jim_thompson5910

you got it

- anonymous

oh gosh now number 4?

- jim_thompson5910

ok what do you want to change the allowances to?

- anonymous

im not sure? why would i change it?

- jim_thompson5910

let's say you have another kid or the kid you have lives elsewhere (eg: the kid gets old enough to live on his own)

- jim_thompson5910

those scenarios would change your allowances

- anonymous

so what should i put for number 4? im still not understanding?

- jim_thompson5910

I think this is where you can get creative and say "I want another kid, so my allowances go from 2 to 3"

- jim_thompson5910

then you recalculate your taxes and refund
make sense?

- anonymous

so how do i calculate all of that?

- anonymous

so say i have 3 allowences for the first part of number 4

- anonymous

for the second bullet my answer would be $1,109.42?

- jim_thompson5910

you would then calculate your new federal withholding

- anonymous

how
?

- jim_thompson5910

use the table from the last part

- anonymous

what do you mean? what table?

- anonymous

@jim_thompson5910

- jim_thompson5910

remember the table where you circled the 2 and highlighted the 1664.52?
it's that table

- anonymous

right so if i had 3 allowances now then the second bullet my answer would be $1,109.42?

- jim_thompson5910

what do you mean by "second bullet"?

- anonymous

?

- jim_thompson5910

you said "then the second bullet my answer"
what did you mean by "second bullet"?

- anonymous

oh ahah this

- anonymous

##### 1 Attachment

- jim_thompson5910

oh i see

- jim_thompson5910

first bullet: the new federal withholding is $1,109.42 (you find this from the table)
second bullet: this is where you calculate the new refund
third bullet: an explanation as to why the refund changes

- jim_thompson5910

that's the basic format of your answer

- anonymous

i see but what im saying is how do i calculate all of this?

- jim_thompson5910

remember how we calculated the refund for the allowance of 2 people?

- anonymous

hold on let me see

- anonymous

ugh im getting so mad :( i dont know...

- jim_thompson5910

it's ok, don't panic
just take things one step at a time

- jim_thompson5910

what was the tax liability?

- anonymous

for 3 allowences?

- jim_thompson5910

no don't worry about the allowances for now

- jim_thompson5910

what was the tax liability?

- anonymous

980?

- jim_thompson5910

the new withholding is $1,109.42
so what's the new refund?

- anonymous

idk?

- jim_thompson5910

hint:
Tax Refund = (Amount you paid) - (Amount you owe)

- anonymous

$1,109.42 - (unknown)
?

- jim_thompson5910

amount you owe is the tax liability

- anonymous

idk how to find out how much i owe

- jim_thompson5910

you just told me the tax liability a few posts ago

- anonymous

what?980?

- jim_thompson5910

yes good, so it is
$1,109.42 - 980 = ???

- anonymous

129.42?

- jim_thompson5910

so this is the new refund

- jim_thompson5910

what was the old refund?

- anonymous

684.52

- jim_thompson5910

good, so clearly the first scenario where you have 2 allowances means you get a higher refund...BUT...you pay more in withholdings
so you have a tradeoff going on

- anonymous

"the new amount of your refund from the government or balance owed to the government" how do i figure this out?

- jim_thompson5910

the new refund is $129.42

- jim_thompson5910

and you figured it out by saying
Tax Refund = (Amount you paid) - (Amount you owe)
and then subtracting 1109.42 - 980

- anonymous

oh i gotcha. so now what should i say for this?an explanation on why changing your personal allowances will increase or decrease the amount of taxes you must pay or the amount of a refund you will receive. The last refund was 684.52 and my new refund is 129.42.

- jim_thompson5910

yeah you have to explain why the refund went down

- anonymous

it is because i now have 3 allowences?

- jim_thompson5910

yes you increased your allowances, which lowered your withholdings and that consequently lowered your refund
so you have a pro and a con
pro: your withholdings are lower, so you pay less to the government
con: your refund is lower, so you receive less money back
it's up to you to decide which is better for you

- anonymous

thank you so much you are the biggest help ever!

- jim_thompson5910

you're welcome, glad to be of help

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