Question

Mariah is filling out her Form 1040. Her taxpayer questionnaire contains the following information: Income from W2 - Target Corporation: $28,000; Smith County Humane Society: $12,500; Millhouse Diner: $9,300. Form 1099-INT - Chase Bank: $3. How should Mariah report these income sources on her Form 1040?

Answer 1

Mariah should report her income from W-2 forms on line 1 of the Form 1040, and her income from other sources on line 7. She should report the Form 1099-INT income on the interest income section of the Form 1040.

Step-by-step explanation:

To report the income sources on her Form 1040, Mariah should follow the IRS guidelines for reporting different types of income. First, she should report her income from W-2 forms on line 1 of the Form 1040. In this case, Mariah should report her income of $28,000 from Target Corporation under the W-2 section. She should then report her income of $12,500 from Smith County Humane Society and $9,300 from Millhouse Diner under the Other Income section on line 7 of the Form 1040. As for the Form 1099-INT income, Mariah should report the $3 from Chase Bank on the interest income section of the Form 1040.

Answer 2

Mariah should report her combined W2 wages on line 1 of Form 1040 and her interest income on line 2b. Each W2 income from different employers should be accounted for separately, while Form 1099-INT is used for reporting interest income. Understanding taxable income calculations and marginal tax rates is critical for accurately completing the tax form.

Step-by-step explanation:

Mariah should report her income sources on her Form 1040 as follows: The income from W2 from Target Corporation, Smith County Humane Society, and Millhouse Diner should be combined and reported as earned income on line 1 of the 1040 form, which covers wages, salaries, tips, etc. This totals $49,800 ($28,000 + $12,500 + $9,300). The $3 of interest income that Mariah received from Chase Bank should be reported on Schedule B (if required) and on line 2b (the line for taxable interest) of the Form 1040.

Regarding further details, each income source on a W2 has its separate box to report the earnings from each employer. The Form W-2 reflects income from an employer and Mariah should have received one from each of her employers. The interest income indicated on a Form 1099-INT is reported separately from earned income as it is considered investment income.

When preparing income tax returns, it's crucial to understand the taxable income formula, which is:taxable income = adjusted gross income - (deductions + exemptions)This considers all income sources and the standard deduction or itemized deductions. Understanding the marginal tax rate principle is also critical, which means that the rate at which the last dollar of income is taxed. Mariah will want to understand this as her total income may place her at a higher marginal tax rate than her initial dollars earned.