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4. Ned is single and lives alone. He covers all of the household expenses of his mother Barbara who lives down the street. Barbara has gross income of $4,500. Can Ned file as “head of household?”
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- Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6777. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1112. Bill lives with Ashley, and she fully supports him. Bill spent 2018 traveling in Europe and was not a college student. He had gross income of 4,655 in 2018. Bill paid 4,000 of lodging expenses that Ashley reimbursed after they were fully documented. Ashley paid the 4,000 to Bill using a check from her sole proprietorship. That amount is not included in the items listed below. Ashley had substantial health problems during 2018, and many of her expenses were not reimbursed by her health insurance. Ashley owns Panda Enterprises, LLC (98-7654321), a data processing service that she operates as a sole proprietorship. Her business is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2018 Form 1040, Schedule C for Panda Enterprises shows revenues of 315,000, office expenses of 66,759, employee salary of 63,000, employee payroll taxes of 4,820, business meal expenses (before the 50% reduction) of 22,000, and rent expense of 34,000. The rent expense includes payments related to renting an office (30,000) and payments related to renting various equipment (4,000). There is no depreciation because all depreciable equipment owned has been fully depreciated in previous years. No fringe benefits are provided to the employee. Ashley personally purchases health insurance on herself and Bill. The premiums are 23,000 per year. Ashley has an extensive stock portfolio and has prepared the following analysis: Note: Ashley received a Form 1099B from her stockbroker that included the adjusted basis and sales proceeds for each of her stock transactions. The per-share cost includes commissions, and the per-share selling price is net of commissions. Also, the dividends are the actual dividends received in 2018, and these are both ordinary dividends and qualified dividends. Ashley had 800 of interest income from State of Ohio bonds and 600 of interest income on her Wayne Savings Bank account. She paid 25,000 of alimony to her former husband. His Social Security number is 123-45-6788. Ashley itemizes her deductions and provides the following information, which may be relevant to her return: Ashley made a 26,000 estimated Federal income tax payment, does not want any of her taxes to finance presidential elections, has no foreign bank accounts or trusts, and wants any refund to be applied against her 2019 taxes. Compute Ashleys net tax payable or refund due for 2018. If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 4, 5, A, C, D, and SE and Form 8949. Ashley qualifies for the 199A deduction for qualified business income. Be sure to include that in your calculations. Suggested software: ProConnect Tax Online.Margaret, age 65, and John, age 62, are married with a 23 -year-old daughter who lives in their home. They provide over half of their daughter's support, and their daughter earned $4,100 this year from a part-time job. Their daughter is not a full-time student. The daughter can/cannot be claimed as a dependent because: She cannot be claimed because she is over 19 and not a full-time student. She can be claimed because she is a qualifying child. She can be claimed because she is a qualifying relative. She cannot be claimed because she fails the gross income test.3. Hank is single. He covers all of the expenses of his home in which his brother Pete lives. Pete is claimed as a dependent by Pete’s father Tony. Can Hank file as “head of household?” Would your answer differ if Hank could claim Pete as his dependent?
- Mary Jane’s father lived with them until his death in November. His only sources of income were salary of $3,800, unemployment compensation benefits of $3,500, and Social Security benefits of $4,100. Of this amount, he deposited $6,000 in a savings account. The remainder of his support of $11,000, which included funeral expenses of $4,500, was provided by John and Mary Jane. Is Mary Jane's father considered a dependant?Vanessa, a single mother, has three children, Mariah (7), Alejandro (12), and Brianna (18). Brianna is a full-time student. Vanessa's adjusted gross income is $68,950, and her tax liability is $5,757. All three children are Vanessa's qualifying child dependents. What is the total of Vanessa's Child Tax Credit and Other Dependent Credit? $5,757 $6,000 $6,500 $9,000Grace provides 52% of the household costs for her widowed mother during the year. Grace claims her mother as a dependent. Can Grace file a return as head of household if her mother does not live with her? Explain the reason for your answer.
- Jane Smith, age 40, is single and has no dependents. She is employed as a legalsecretary by Legal Services, Inc. She owns and operates Typing Services located nearthe campus of Florida Atlantic University at 1986 Campus Drive, Boca Raton, FL 33434.Jane is a material participant in the business. She is a cash basis taxpayer. Jane lives at2020 Oakcrest Road, Boca Raton, FL 33431-Jane’s Social Security number is 123-45-6781. Jane indicates that she wants to designate $3 to the Presidential ElectionCampaign Fund. Jane had health insurance for all months of 2018. During 2018, Janehad the following income and expense items:a. $100,000 salary from Legal Services, Inc.b. $20,000 gross receipts from her typing services business.c. $700 interest income from Third National Bank.d. $1,000 Christmas bonus from Legal Services, Inc.e. $60,000 life insurance proceeds on the death of her sister.f. $5,000 check given to her by her wealthy aunt.g. $100 won in a bingo game.h. Expenses connected with the…Adrienne is a single mother with a 6-year-old daughter who lived with her during the entire year. Adrienne paid $2,500 in child care expenses so that she would be able to work. Of this amount, $500 was paid to Adrienne’s mother, whom Adrienne cannot claim as a dependent. Adrienne had net earnings of $2,000 from her jewelry business. In addition, she received child support payments of $21,100 from her ex-husband. Use Child and Dependent Care Credit AGI schedule. Required: What amount, if any, of child and dependent care credit can Adrienne claim?1. Lorna is a single taxpayer. Which of the following people qualify as her dependents? (all are U.S. citizens, are not married, and have no dependents themselves) (a) Her sister Lisa who lives with her. Lisa works at Burger King but does not make enough to support herself. Lisa is 20 years old and is supported by rich uncle Harry. Lisa’s gross income is $2,000. Suppose Lisa were18 years old – would that change your answer? (b) Her brother Melvin who is 25 and lives down the street from Lorna. Melvin has no gross income. Lorna supports him. (c) Her cousin Felix who is 16 years old. Felix lives with Lorna and has no gross income. Lorna supports him. Suppose rich Uncle Harry supported Felix – would that change your answer? (d) Her niece Maxine who is a full-time student, 22 years old, and lives with Lorna. Maxine has gross income of $4,500. Maxine is supported by her boyfriend Ernesto, who lives in Spain and just sends Maxine money each month. (e) Her great-grandfather Marvin, whom Lorna…
- Jane Smith, age 40, is single and has no dependents. She is employed as a legal secretary by Legal Services, Inc. She owns and operates Typing Services located near the campus of Florida Atlantic University at 1986 Campus Drive, Boca Raton, FL 33434. Jane is a material participant in the business. She is a cash basis taxpayer. Jane lives at 2020 Oakcrest Road, Boca Raton, FL 33431. Jane’s Social Security num-ber is 123-45-6781. Jane indicates that she wants to designate $3 to the Presidential Election Campaign Fund. Jane has never owned or used any virtual currency. During 2019, Jane had the following income and expense items: a. $100,000 salary from Legal Services, Inc. b. $20,000 gross receipts from her typing services business. c. $700 interest income from Third National Bank. d. $1,000 Christmas bonus from Legal Services, Inc. e. $60,000 life insurance proceeds on the death of her sister. f. $5,000 check given to her by her wealthy aunt. g. $100 won in a bingo game. h. Expenses…Tom and Rachel are married and living together in California. Their income is as follows: Tom's salary $40,000 Rachel's salary 30,000 Dividends (Tom's property) 5,000 Dividends (Rachel's property) 3,000 Interest (community property) 4,000 Total $82,000 Question a)If Rachel files a separate tax return, she should report income of: Question b)If Tom and Rachel lived in Texas, what should Rachel report as income?Ms. Nelson is a single mom with three children who live at home. She earned less than $40,000 in 2018. What is the maximum amount of earned income tax credit that she may qualify for?