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

Solution:

Earn income credit is a credit over tax by the United States that helps the the tax payers who are having low income from work in any of the particular year. The tax payer must be between the age of 25 years to 65 years of age. By this earn income credit the amount of tax which has to be paid by the tax payer is reduces by on Dollar for Dollar basis that may results in a refund of tax to the taxpayer.

Like: 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 Tax 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. Qualified dependent means a child who is younger than 19 years but he/she is a full time student then the age must be less then 24 years.

as per the condition mentioned Sara's income is $6000 but her daugher is declaired dependent to the fathe so Sara can clain earn tax credit With zero dependent.

Declaration of estimated Tax: If any taxpayer how will be expected to earn taxable income but with less then 1.8% tax holding must declare his income at the beginning of that particular year and has to pay the tax on it Quaterly.