Problem 5: Calculate net tax due Saji and Henry Lozano are married for all of 2023 and have an AGI of $250,000, taxable income of $150,000 and calculated income tax liability of $51,000. Their income tax liability in 2022 was $50,000 (and 2022 AGI was $130,000), and they had the minimum amount of withholding and estimated income tax payments to ensure that they will not be subject to any estimated tax penalties and had $8,300 withheld from their wages for their portion of Social Security and Medicare taxes. In addition, they provided you with the following information: They maintained a home for Saji’s dependent 70 year old father. They have one child, Joshua, who is 12 years old and meets the requirements of a qualifying child. During the year they spend $10,000 on a nanny to watch him while they are both at work (you can assume they make equal amounts of earned income). Required: What is the Lozano’s net tax due(refunded) for 2023?

To calculate the Lozano's net tax due or refund for 2023, we need to consider their calculated income tax liability, any tax credits they may be eligible for, and the total amount of tax they've already paid through withholding and estimated tax payments. **Calculated Income Tax Liability for 2023:** - $51,000 **Withholding and Estimated Tax Payments:** - They made the minimum amount of withholding and estimated income tax payments to avoid penalties. This means they would have paid at least 100% of their prior year's tax liability (since their AGI is less than $150,000), which was $50,000, or 90% of their current year's tax liability, whichever is smaller. Since their tax liability increased, they likely paid 100% of the $50,000 to avoid penalties. **Social Security and Medicare Taxes:** - The $8,300 withheld for Social Security and Medicare taxes is separate from their income tax liability and does not affect their income tax due or refund. **Tax Credits:** - Child Tax Credit: For 2023, the Child Tax Credit is $2,000 per qualifying child, which would be $2,000 for Joshua. - Child and Dependent Care Credit: They may be eligible for the Child and Dependent Care Credit for the $10,000 they spent on a nanny for their 12-year-old child. For 2023, assuming the credit has reverted to pre

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