Reference no: EM131720067
Federal Income Taxes Midterm Exam - Show all components of your work for partial credit review.
Mike (age 40) and Carol (age 39) Brady are married. Carol works as a retail manager and Mike is a self-employed architect but does not maintain a home office. Their 2016 tax and other information are as follows:
|
Salary - Carol
|
80,000
|
|
Federal withholding on salary
|
15,000
|
|
State withholding on salary
|
5,000
|
|
Interest income on municipal bonds:
|
|
|
State of Connecticut
|
2,500
|
|
Savings account interest
|
1,000
|
|
Dividends from RGR, Inc. (all are non-qualified)
|
4,000
|
|
Value of employer provided medical insurance
|
3,000
|
|
Inheritance from Carol's father's estate
|
6,000
|
|
Interest paid on personal car loan
|
2,500
|
|
Interest paid on personal loan
|
1,000
|
|
Child support paid to Mike's ex-wife
|
12,000
|
|
Alimony paid to Mike's ex-wife
|
6,000
|
|
Qualified Out of Pocket Medical Expenses
|
4,000
|
|
Donations to church
Real Estate taxes on primary residence
|
2,500
6,000
|
|
Mortgage interest on primary residence (<$1M)
|
4,000
|
|
Mike's business revenues
|
50,000
|
|
Mike's business expenses
|
15,000
|
Required: Using the tax formula format, determine the following for the Brady's 2016 tax year (show all calculations):
a. All Income $___________
b. Exclusions (if any) $ ___________
c. Gross income (including Mike's SE income) $ ___________
d. Deductions For AGI $ ___________
e. Adjusted gross income $ ___________
f. Itemized deduction or standard deduction amount $ ___________
g. Deduction for exemptions $ ___________
h. Taxable income $ ___________
i. Income tax liability $ ___________
j. Self-employment tax liability $ ___________
k. Net tax due or refund (show calculation) $ ___________