ACA1 Task 2 Complete Essay

1297 Words Feb 3rd, 2015 6 Pages
ACA1 Tax Treatments for Individual Returns (Task 302.2.3)

A. Recommended Tax Filing Status The tax filing status that I would recommend is Married Filing Joint. The reason for this is that the IRS has various tax breaks for married persons that file together that are unavailable if you file married filing separate. It also affect the tax rate, they will pay a lower rate of taxes if they file together than they would if they filed separately.

A2a. Taxable and Non-Taxable Income Taxable Income for the couple would include the following items: Spouse A’s income from the partnership, Spouse A’s income from the part time job, Spouse B’s income from the electronics firm, and the dividends that were received by Spouse A from Company
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Since the law no longer distinguishes between corporate and other plan sponsors, the term is seldom used.” ("Retirement Plans for Self-Employed People", 2014)

The moving expenses are not an adjustment to Income, the reason for this is that on form 3903 there is a distance test worksheet, when the calculation is done it shows the move was not a difference of 50 or more miles since the move was 52 miles minus the distance to her previous job of 3 miles it is only 49. This does not qualify them to deduct their expenses.

A5. Deductions

The itemized deductions that the couple would be allowed to take are a deduction for their medical expenses in the amount of expenses that exceeds 10% of their Adjusted Gross Income (line 38 on 1040). So they would take their 10% of their AGI and subtract that number from their total medical expenses and the remaining amount is the available deduction. I don’t believe this would result in much of a deduction if any in their situation. The 6,000 in charitable contributions would be an itemized deduction. However, the 2,600 in business suits is not a valid deduction because you can wear a business suit as everyday clothing. If the clothing were a uniform or something more specifically required by the job that she would not

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