Question

Madison's gross tax liability is $9,000. Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer. What are Madison's taxes due (or taxes refunded) with her tax return?
A) $0 taxes due and $0 tax refund.
B) $6,000 taxes due.
C) $2,000 tax refund.
D) $1,000 taxes due.

Answer 1

Answer:

C. $2000 tax refund

Explanation:

Given that

Tax liability = 9000

Tax credits = 3000

Tax withheld = 8000

Maddison tax return = Gross tax liability - tax credits - tax withheld

Therefore

Tax return = 9000 - 3000 - 6000

= -2000.

This indicates a tax refund of $2,000