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Now we're ready to talk about the "Payments and tax" section on James B. Jones' tax return.
He's a single filer, he is living in Austin, working for the John L. Smith Construction
Company, and we look at box "2", he's had $3,810 in taxes withheld, so we have that
amount on line "7", $3,810. He doesn't qualify for the Earned Income Credit, so that's zero,
and we add lines "7" and "8", so line "9" is still $3,810. Now we need to calculate
the amount of tax he owes and compare that to the amount of tax he paid. So, to do that,
we take his income of $34,720, minus the $8,750, so his taxable income is $25,970, and we go
to the tax tables. Now on page 20 of the tax tables, right in the middle you'll see $25,000
and we go to the section "$25,950 to $26,000 and we see that his income is in that bracket
and for a single taxpayer, he owes $3,505. So we put that amount on line "10", and then
subtract line "10" from line "9", since he's actually paid more than he owes, and put the
difference, $305, on line "11".