Question

Describe the earned income credit. Sara's only source of income was wages of $6,000. She and her daughter live with her parents. The daughter is claimed as a dependent by the father. Is Sara eligible to the earned income credit? Discuss the declaration of estimated to

Answer 1

Earn income credit is a credit over tax by the United States that helps the the tax pairs who are having low income from work in any of the particular year. By this earn income credit the amount of tax which has to be bear by the tax payes is reduces by on Dollar for Dollar basis that main results in a refund of text to the taxpayer.

It means if a taxpayer having a tax bill of $3,000 and he is eligible to claim tax credit of $550 then he has to pay only e $2450 of Tex to the internal revenue service.The amount of tax credit it is depends upon the annual income earned for the particular financial year and the number of qualified dependents that the taxpayer has. The qualified dependent should be younger than 19 years or if he or she is a full time student must be younger than 24 years of age.and the Tax payer's age must be between 25 to 65 years of age.

in the above case Sara's income is $6000 but her daughter is declared dependent by the father so he can claim tax credit but under zero dependent catagory.

Declaration on Estimated tax

If any Taxpayer is expected to recieve annual taxable income with less then 1.8% tax withheld must declate his income at the beginning of that particular year, and pay the estimated tax on his income Quaterly.