Question

Each of the following cases involves a taxable year of less than 12 months. In which situations is annualization required?

a. When the income exceeds $50,000
b. When the taxpayer is under 18 years old
c. When the tax credits are claimed
d. When the taxable income is calculated for comparison

Answer 1

Annualization is required when the taxable income is calculated for comparison.

Step-by-step explanation:

An annualization is required in situation d, when the taxable income is calculated for comparison. The tax code allows taxpayers to compare their income by annualizing it, even if their taxable year is less than 12 months. This is done to ensure a fair and accurate comparison.