A SINGLE FATHER’S TAX SITUATION Ever since his wife’s death, Eric Stanford has faced difficultpersonal and financial circumstances. His job provides him with afairly good income but keeps him away from his daughters, ages 8and 10, nearly 20 days a month. This requires him to use in-homechild care services that consume a major portion of his income.Since the Stanford’s live in a small apartment, this arrangementhas been very inconvenient. Due to the costs of caring for hischildren, Eric has only a minimal amount withheld from his salaryfor federal income taxes. Thus more money is available during theyear, but for the last few years he has had to make a payment inApril- another financial burden. Although Eric has created aninvestment fund for his daughters’ college education and for hisretirement, he has not sought to select investments that offer taxbenefits. Over- all, he needs to look at several aspects of his taxplanning activities to find strategies that will best serve hiscurrent and future financial needs. Eric has assembled the following information for the current taxyear: Earnings from wages, $71,604 Interest earned on savings, $50 IRA deduction, $3,000 Checking account interest, $45 Three exemptions at $3,950 each Current standard deduction for filing status, $9100 Amount withheld for federal income tax, $4825 Tax credit for child care, $1200 Child tax credit, $1,000 Filing status: Head of Household 1. What are Eric’s major financial concerns in hiscurrent situation? 2. In what ways might Eric improve his tax planningefforts? . . .
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