Problem 5-2Self-Employed Health Insurance Deduction (LO 5.2) Serena is a 38-year-old single taxpayer. She operates a small business on the side as a sole proprietorship. Her 2019 Schedule C reports net profits of $15,624. Her employer does not offer health insurance. Serena pays health insurance premiums of $7,545 in 2019. Serena also pays long-term care insurance premiums of $600 in 2019. Calculate Serena's self-employed health care deduction.$

Problem 5-2Self-Employed Health Insurance Deduction (LO 5.2) Serena is a 38-year-old single taxpayer. She operates a small business on the side as a sole proprietorship. Her 2019 Schedule C reports net profits of $15,624. Her employer does not offer health insurance. Serena pays health insurance premiums of $7,545 in 2019. Serena also pays long-term care insurance premiums of $600 in 2019. Calculate Serena's self-employed health care deduction.$

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 30P: LO.2 What is the taxpayers gross income in each of the following situations? a. Darrin received a...

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LO.2 Belinda spent the last 60 days of 2019 in a nursing home. The cost of the services provided to her was 18,000 (300 per day). Medicare paid 8,500 toward the cost of her stay. Belinda also received 5,500 of benefits under a long-term care insurance policy she purchased. Assume that the Federal daily excludible amount is 370. What is the effect on Belindas gross income?
LO.2 For calendar year 2019, Jean was a self-employed consultant with no employees. She had 80,000 of net profit from consulting and paid 7,000 in medical insurance premiums on her policy covering 2019. How much of these premiums may Jean deduct as a deduction for AGI? How much may she deduct as an itemized deduction (subject to the AGI floor)?
LO.4, 8 Joyce, a widow, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns 33,000 during 2019. She uses the standard deduction. a. Calculate the amount, if any, of Joyces earned income credit. b. During the year, Joyce is offered a new job that has greater future potential than her current job. If she accepts the job offer, her earnings for the year will be 39,000; however, she is afraid she will not qualify for the earned income credit. Using after-tax cash-flow calculations, determine whether Joyce should accept the new job offer. Since the child tax credit will be the same under either scenario, you can ignore it for purposes of this analysis.
LO.2, 5 Rosas employer has instituted a flexible benefits program. Rosa will use the plan to pay for her daughters dental expenses and other medical expenses that are not covered by health insurance. Rosa is in the 24% marginal tax bracket and estimates that the medical and dental expenses not covered by health insurance will be within the range of 4,000 to 5,000. Her employers plan permits her to set aside as much as 5,000 in the flexible benefits account. Rosa does not itemize her deductions. a. Rosa puts 4,000 into her flexible benefits account, and her actual expenses are 5,000. What is her cost of underestimating the expenses? b. Rosa puts 5,000 into her flexible benefits account, and her actual expenses are only 4,000. What is her cost of overestimating her expenses? c. What is Rosas cost of underfunding as compared with the cost of overfunding the flexible benefits account? d. Does your answer in part (c) suggest that Rosa should fund the account closer to the low end or to the high end of her estimates?
LO.2 What is the taxpayers gross income in each of the following situations? a. Darrin received a salary of 50,000 from his employer, Green Construction. b. In July, Green gave Darrin an all-expense-paid trip to Las Vegas (value of 3,000) for exceeding his sales quota. c. Megan received 10,000 from her employer to help her pay medical expenses not covered by insurance. d. Blake received 15,000 from his deceased wifes employer to help him in his time of greatest need. e. Clint collected 50,000 as the beneficiary of a group term life insurance policy when his wife died. The premiums on the policy were paid by his deceased wifes employer.
LO.2 Emma Doyle is employed as a corporate attorney. For calendar year 2020, she had AGI of $75,000 and paid the following medical expenses: Medical insurance premiums $3,700 Doctor and dentist bills for Bob and April (Emma’s parents) 6,800 Doctor and dentist bills for Emma 5,200 Prescription medicines for Emma 400 Nonprescription insulin for Emma 350 Bob and April would qualify as Emma’s dependents except that they file a joint return. Emma’s medical insurance policy does not cover them. Emma filed a claim for reimbursement of $2,800 of her own expenses with her insurance company in December 2020 and received the reimbursement in January 2021. What is Emma’s maximum allowable medical expense deduction for 2020? Prepare a memo for your firm’s tax files in which you document your conclusions.
D5. Account Isabela is single and turned 72 years old on October 1, 2022. Isabela worked as a librarian at the local library and earned wages of $7,500. Isabela also received Social Security benefits of $16,000. She received a taxable pension of $13,000. She retired from her previous job on October 30, 2019. During her career she contributed pretax dollars to a qualified 401(k) retirement plan through her employer. Isabela cannot be claimed as a dependent by another taxpayer. Isabela is a U.S. citizen with a valid Social Security number. sabela qualifies to claim the Earned Income Tax Credit. Isabela must take her first required minimum distribution by April 1, 2023. True False
Medical Expenses (LO 5.6) In 2019, Margaret and John Murphy (age 66 and 68, respectively) are married taxpayers who file a joint tax return with AGl of $26,100. During the year they incurred the following expenses: Medical insurance premiums $1,300 Premiums on an insurance policy that pays $100 per day for each day Margaret is hospitalized 400 Medical care lodging (two people, one night) 65 Hospital bills 2,100 Doctor bills 850 Dentist bills 200 Prescription drugs and medicines 340 Psychiatric care 350 In addition, they drove 80 miles for medical transportation, and their insurance company reimbursed them $800 for the above expenses. On the following segment of Schedule A of Form 1040, calculate the Murphy's medical expense deduction. If required, round any amount to the nearest dollar. Enter all amounts as positive numbers.
Comprehensive Problem 1-1A Maria Tallchief is a single taxpayer, age 27 (birthdate May 18, 1994) living at 543 Space Drive, Houston, TX 77099. Her Social Security number is 466-33-1234. For 2021, Maria has no dependents, and received a W-2, from her job at a local restaurant where she is a cashier. These wages are Maria's only income for 2021. Maria received a $1,400 EIP in 2021. Required:Complete Form 1040 for Maria Tallchief for the 2021 tax year. If there is an over-payment, she would like a refund. She wants to donate $3 to the Presidential Election Campaign Fund. The election to donate does not affect tax liability in any way. Maria has health care coverage for the full year. Enter all amounts as positive numbers. If an amount box requires no entry or the amount is zero, enter "0". If required, round amounts to the nearest dollar. Maria's W-2, from her job at a local restaurant where she parks cars, contains the following information: a Employee's social security number…