Internal Revenue Service

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ACA1 Task 302.2.3 The Internal Revenue Service provides five different tax filing statuses to choose from when filing individual tax returns: 1. Single 2. Married filing separately 3. Married filing jointly 4. Head of household 5. Qualifying widow(er) with dependent child(ren) A. Recommended Tax Filing Status After reviewing the financial data for spouse A and B, it is my recommendation that the couple file their taxes using the married filing jointly status. The couple qualifies for two personal exemptions (one each) and three exemptions for their dependent children. While spouse B’s mother lived with the couple during the year, they will receive no exemptions for her. Spouse B’s mother pays the couple $7,920 a year from her…show more content…
The couple experienced a passive loss on two of their rental properties. They had total income of $23,000 in rent for both properties, but they also experienced expenses and depreciation in the amount of $29,200 resulting in a $6,200 loss. 2. The couple experienced a $44,000 gain on the sale of their third rental property. This gain would be counterbalanced by any purchase/selling costs, repairs/improvements, rental income and depreciation on the rental property. Couple A and B would be able to use their passive loss of $6,200 to offset their passive income of $44,000. The couple had no prior year losses from passive activities therefore they would report a passive gain of $37,800. With a modified adjusted gross income over $100,000 the couple would file using Form 8582. A4. Adjustments to Income Adjusted gross income (AGI) is total income less all allowable adjustments. To determine the couple’s adjusted gross income the following items must be considered: 1. Spouse A’s alimony in the amount of $7,200 2. Keogh retirement plan contributions 3. Spouse A’s self employment tax from the partnership 4. Self-employed health insurance deduction
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