INDIVIDUAL INCOME TAX
2019th Edition
ISBN: 9780357323410
Author: VALUE EDITION
Publisher: CENGAGE L
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Chapter 10, Problem 41CP
(1)
To determine
Compute net tax payable or refund due for Person A and Person B for 2018.
(1)
Expert Solution
Explanation of Solution
Compute net tax payable or refund due for Person A and Person B for 2018:
| Particulars | Amount ($) |
| Person B's salary | $62,100 |
| Person A's salary | $58,000 |
| Interest income | $2,750 |
| Adjusted gross income | $122,850 |
| Less: Itemized deductions (1) | ($36,486) |
| Taxable income | $86,364 |
| Tax from 2018 Married filing Joint tax table | $10,882 |
| Less: Prepayments and Credits | |
| Income tax withheld ($5,300 + $4,500) | ($9,800) |
| Dependent tax credit (2) (2 × $500) | ($1,000) |
| Net tax payable (or refund due) for 2018 | $82 |
Table (1)
Therefore, net tax payable for 2018 is $82.
Working note (1): Compute the total itemized deductions:
| Particulars | Amount ($) | Amount ($) |
| Medical expenses: | ||
| Medical insurance premiums | $4,500 | |
| Doctor bill for Person S paid in 2018 for services in 2017 | $7,600 | |
| Operations for Person S | $8,500 | |
| Prescription medicines for Person S | $900 | |
| Hospital expenses for Person S | $3,500 | |
| Total medical expenses | $25,000 | |
| Less: Reimbursement received in 2018 | ($3,600) | |
| Less: 7.5% of $122,850 AGI | ($9,214) | |
| Medical expenses deductible in 2018 | $12,186 | |
| Taxes: | ||
| State income taxes ($3,100 + $2,950 + $900) | $6,950 | |
| Property taxes on residence | $5,000 | |
| $11,950 | ||
| Overall limit on state and local taxes | $10,000 | |
| Qualifies interest on home mortgage | $8,700 | |
| Charitable contributions: (3) | ||
| Church contribution | $5,000 | |
| Tickets to charity dinner dance | $250 | |
| (Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible) | ||
| used clothing donated (limited to fair market value) | $350 | $5,600 |
| Total itemized deductions | $36,486 |
Table (2)
Therefore, total itemized deductions $36,486.
Note: The expenses for Person A’s uniforms and laundry
Working note (2): Determine the dependent tax credit:
In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.
Working note (3): Determine charitable contribution:
The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.
(2)
To determine
Compute the taxable income and tax liability for 2019 in the given situation.
(2)
Expert Solution
Explanation of Solution
Compute the taxable income and tax liability for 2019 in the given situation:
| Particulars | Amount ($) |
| Person B's salary | $88,000 |
| Interest income ($32,000 + $2,750) | $34,750 |
| Adjusted gross income | $122,750 |
| Less: Itemized deductions (4) | ($30,794) |
| Taxable income | $91,956 |
| Tax liability from 2019 Married, filing jointly tax rate schedule | $11,947 |
Table (3)
Therefore, Tax liability from 2019 married, filing jointly tax rate schedule is $11,947.
Working note (4): Determine the itemized deductions:
| Particulars | Amount ($) | Amount ($) |
| Medical expenses: | ||
| Medical insurance premiums | $9,769 | |
| Estimated costs for Person A | $9,000 | |
| Less: 10% of $122,750 AGI | ($12,275) | $6,494 |
| Taxes: | ||
| State income taxes | $7,100 | |
| Property taxes on residence | $5,100 | |
| $12,200 | ||
| Overall limit on state and local taxes | $10,000 | |
| Qualified interest on home mortgage | $8,700 | |
| Charitable contributions | $5,600 | |
| Total itemized deductions | $30,794 |
Table (4)
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Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6784 and 111-11-1113, respectively. Alice's birthday is September 21, 1972, and Bruce's is June 27, 1971. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (Employer Identification Number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (Employer Identification Number 11-1111111).
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Line
Description
Alice
Bruce
1
Wages, tips, other compensation
$58,000
$62,100
2
Federal income tax withheld
4,500
5,300
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62,100
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3,850
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900
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41. Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6784 and 111-11-1113, respectively. Alice’s birthday is September 21, 1974, and Bruce’s is June 27, 1973. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (Employer Identification Number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (Employer Identification Number 11-1111111). The following information is shown on their Wage and Tax Statements (Form W–2) for 2021.
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The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1997, Social Security number 123-45-6788) and John (born February 7, 2001, Social Security number 123-45-6780). Both children are full-time students and live with the Byrds except when they are away…
Chapter 10 Solutions
INDIVIDUAL INCOME TAX
Ch. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - LO.2 David, a sole proprietor of a bookstore, pays...Ch. 10 - LO.2 Jayden, a calendar year taxpayer, paid 16,000...Ch. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQ
Ch. 10 - LO.5 Thomas purchased a personal residence from...Ch. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - LO.6, 8 William, a high school teacher, earns...Ch. 10 - LO.2 Barbara incurred the following expenses...Ch. 10 - Prob. 16CECh. 10 - Prob. 17CECh. 10 - Prob. 18CECh. 10 - Prob. 19CECh. 10 - Prob. 20CECh. 10 - Prob. 21CECh. 10 - Prob. 22PCh. 10 - Prob. 23PCh. 10 - LO.2 Paul suffers from emphysema and severe...Ch. 10 - LO.2 For calendar year 2019, Jean was a...Ch. 10 - LO.2 During 2019, Susan incurred and paid the...Ch. 10 - In May, Rebeccas daughter, Isabella, sustained a...Ch. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - Prob. 34PCh. 10 - On December 27, 2019, Roberta purchased four...Ch. 10 - Prob. 36PCh. 10 - Prob. 37PCh. 10 - Prob. 38PCh. 10 - LO.2, 3, 4, 5, 6, 7 Linda, who files as a single...Ch. 10 - LO.2, 3, 4, 5, 6, 7 For calendar year 2019, Stuart...Ch. 10 - Prob. 41CPCh. 10 - Marcia, a shareholder in a corporation with stores...Ch. 10 - Prob. 4RPCh. 10 - Prob. 1CPACh. 10 - Prob. 2CPACh. 10 - Prob. 3CPACh. 10 - Kurstie received a 800 state income tax refund...Ch. 10 - Which of the following would preclude a taxpayer...Ch. 10 - Prob. 6CPA
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