1. Amelia and Addison are your grandparents. Amelia and Addison asked you to help them with their tax return in 2020. Below is a few financial info that they provide you: Both Amelia and Addison main source of income is from their rental house. In 2020, they earned $48,000 in total from their rental properties. In the middle of 2020, Addison had heart attack and must go to the emergency room. The total medical cost that Addison paid out of pocket was $5000 Knowing that her dad had a bad accidence, Alice came over to visit and gave the old couple a $10,000 check in September 2020. The couple did not immediately cash in the check but plan to only cash it in January 2021. Amelia told you that she hopes that by doing so, she would not have to recognize the amount in 2020. Amelia and Addison paid $24,000 in total on their Texas property tax in 2020 On their Vegas trip in early 2020, Amelia played Blackjack and won $2000. However, Addison was not that lucky and lost S1000. a) What filing status do you recommend for Amelia and Addison. b) What is Amelia and Addison Gross income. (Provide detailed explanation on why or why not you include certain items. Failing to provide explanation will got point deducted) c) What is Amelia and Addison Adjustments/For AGI deduction (Provide detailed explanation on why or why not you include certain items. Failing to provide explanation will got point deducted) d) What is Amelia and Addison total Itemized deduction. (Provide detailed explanation on why or why not you include certain items. Failing to provide explanation will got point deducted) e) What is Amelia and Addison standard deduction? Show calculation and explanation if needed. f) What is Amelia and Addison total taxable income? Filing status Married Jointly NOTES 45,000 (-) 45,000 24,800 24,800 200 Gross Income Adjustments (Above the Line deductions) Adjusted Gross Income (AGI) From AGI deduction: Greater of (a) Standard deduction OR (b) Itemized deduction Deduction for Qual. Business Income Taxable income Marginal Tax rate Income tax liability Credit Prepayment Tax due or (Tax refund) 20,200 129 2,029 (-) 2,029 Fed income tax brackets Tax rate Husband Wific Both wife and husband Tax rate Single Taxable income bracket Tax owed 10%50 to 9.875 10% of taxable income 12% 89,876 to $40,125 $987.50 plus 12% of the amount over $9.875 229 540,126 to $85.525 54.617.50 plus 22% of the amount over $40,125 24% 585.526 to $163_300 $14.605.50 plus 20% of the amount over $85.525 3295163,301 to $207,350 $33.271.50 plus 32% of the amount over S163,300 35% $207,351 to $$18.400 547.367.50 plus 35% of the amount over $207,350 37% 5518,401 or more $156,235 plus 37% of the amount over $518,400 Married filling jointly Taxable income bracket Tax owed 10% 50 to $19,750 10% of taxable income 12% $19,751 to $80,250 $1,975 plus 12% of the amount over $19.750 22% 580,251 to $171,050 $9.235 plus 22% of the amount over $0,250 24%8171,051 to $326,600 $29.211 plus 24% of the amount over $171,050 32% 5326,601 to $414,700 $66.543 plus 32% of the amount over $326,600 35% 5414,701 to 5622,050 $94.735 plus 35% of the amount over $414.700 37%$622,051 or more $167.307.50 plus 37% of the amount over $622,050 Married filing Meparately Taxable income bracket Tax owed 10% 50 to $9,875 10% of taxable income 12% 89.876 to $40,125 $987.50 plus 12% of the amount over $9.875 22% 540,126 to 585,525 $4.617.50 plus 22% of the amount over $40.125 24% 585.526 to $163,300 $14.605.50 plus 24% of the amount over $85.525 32% S163,301 to $207,350 $33.271.50 plus 32% of the amount over $163.300 35% $207,351 to $311,025 $47.367.50 plus 35% of the amount over $207,350 37% $11.026 or more $83.653.75 plus 37% of the amount over $311,025 Head of household Taxable income bracket Tax owed 10% 50 to $14,100 10% of taxable income 12% $14,101 to $53,700 $1,410 plus 12% of the amount over $14,100 22% 553,701 to $85,500 56,162 plus 22% of the amount over $53,700 24% 585,501 to $163,300 $13,158 plus 24% of the amount over $85,500 32%8163,301 to $207,350 $31.830 plus 32% of the amount over S163,300 35%$207,351 to $$18.400 $45.926 plus 35% of the amount over $207,350 37% $518,401 or more S154.793.50 plus 37% of the amount over $518,400 Tax rate Tax rate 2020 Standard Deduction Filing Status Deduction Amount Single Married Piling Jointly Head of Household $12,4001 524.800 $18,650 2020 Child Tax Credit S2000/child 2020 Tax Rates on Long Term Capital Gains For Unmarried Individuals For Married Individuals Filing Joint Returns For Heads of Household Tax Rate Taxable income Over SO SO $80,000 S496,600 $53,600 $469,050 15% $40.000 20% $441,450 Additional Net Investment Incore Tax 3.80% MAGI above $200,000 MAGI above $250,000 MAGI above $200.000 Husband Wife 30,000 50,000 20.125 amount over $9.875 camount over $40,125 the amount over $85.525 the amount over $16.100 the amount over $207,350 amount over $318.400 3.4025 6.790 Taxif each filing separa 10.1925 Both wife and husband Tax joint marriage 80,000 9.205 amount over $19.750 amount over SN3350 camount over $171,050 e amount over $326,600 e amount over $414,700 of the amount over $622,050 e amount over $9.875 the amount over $40,125 the amount over $85.525 the amount over $163,300 the amount over $207,350 the amount over $311,025 amount over $14.100 amount over $53,700 e amount over $85.500 e amount over $163,300 e amount over $207,350 of the amount over $518,400 bital Gains als Filing Joint Returns For Heads of Households SO $80,000 $496,600 SO $53,600 $469,050 MAGI above $200,000 Fed income tax brackets Single Tax rate Taxable income bracket Tax owed 10%|S0 to $9.875 10% of taxable income 129 89,876 to 40,125 5987.50 plus 12% of the amount over $9.875 22% 540,126 to $85.525 54,617.50 plus 22% of the amount over $40,125 24% 585,526 to $163,300 $14,605.50 plus 24% of the amount over $85,525 32% S163,301 to $207,350 $33,271.50 plus 32% of the amount over $163,300 35%$207,351 to $518,400 S47,367.50 plus 35% of the amount over $207,350 37% $518,401 or more S156,235 plus 37% of the amount over $518,400 Married ning jointly Tax rate Taxable income bracket Tax owed 10% 50 to $19,750 10% of taxable income 12% $19,751 to $80,250 $1,975 plus 12% of the amount over $19,750 22% 580,251 to $171,050 $9,235 plus 22% of the amount over $80,250 24%8171,051 to $326,600 $29,211 plus 24% of the amount over $171,050 32%8326,601 to $414,700 $66,543 plus 32% of the amount over $326,600 35%414,701 to $622,050 $94.735 plus 35% of the amount over $414,700 37%$622,051 or more S167,307.50 plus 37% of the amount over $622,050 Married filling separately Tax rate Taxable income bracket Tax owed 10% 50 to $9.875 10% of taxable income 12% 89,876 to S40,125 $987.50 plus 12% of the amount over $9,875 22% 540,126 to $85,525 S4,617.50 plus 22% of the amount over $40,125 24% 585,526 to $163,300 S14,605.50 plus 24% of the amount over $85,525 32% S163,301 to $207,350 $33,271.50 plus 32% of the amount over $163,300 35%$207,351 to $311,025 $47,367.50 plus 35% of the amount over $207,350 37%$311,026 or more $83,653.75 plus 37% of the amount over $311,025 Head of household Tax rate Taxable income bracket Tax owed 10% 50 to $14,100 10% of taxable income 12% S14,101 to $53,700 $1,410 plus 12% of the amount over $14,100 22% 553,701 to $85,500 $6,162 plus 22% of the amount over $53,700 24% 585,501 to $163,300 $13,158 plus 24% of the amount over $85,500 32% 5163,301 to $207,350 $31.830 plus 32% of the amount over $163,300 35%$207,351 to $518,400 $45.926 plus 35% of the amount over $207,350 37% 5518,401 or more S154,793.50 plus 37% of the amount over $518,400 Taxable income 20.200 Single Threshold Rate Cummulative tax 0 10 0 9.875 12% 9875 40,125 22% 4,6175 85,525 14,605 163,300 33.271.5 207,350 35% 47,3675 518,400 37% 156,235 Married filing jointly Threshold Rate Cummulative tax 0 10% 0 19.750 12% 1,975 80,250 22% 9,235 171.050 24% 29,211 326,600 32% 66,543 414.700 35% 94,735 622,050 37% 167,307.5 Married filling separately Threshold Cummulative tax 0 10% 0 9,875 12% 9875 40,125 22% 4,6175 85,525 24% 14,605 163,300 32% 33.271.5 207,350 35% 47,3675 311,025 37% 83.653.75 Head of household Threshold Rate Cummulative tax 0 10% 0 14,100 1.410 53,700 22% 6,162 85,500 24% 13.158 163,300 31.830 207,350 35% 45.926 $18.400 37% 154.793.5 Rate 1. Amelia and Addison are your grandparents. Amelia and Addison asked you to help them with their tax return in 2020. Below is a few financial info that they provide you: Both Amelia and Addison main source of income is from their rental house. In 2020, they earned $48,000 in total from their rental properties. In the middle of 2020, Addison had heart attack and must go to the emergency room. The total medical cost that Addison paid out of pocket was $5000 Knowing that her dad had a bad accidence, Alice came over to visit and gave the old couple a $10,000 check in September 2020. The couple did not immediately cash in the check but plan to only cash it in January 2021. Amelia told you that she hopes that by doing so, she would not have to recognize the amount in 2020. Amelia and Addison paid $24,000 in total on their Texas property tax in 2020 On their Vegas trip in early 2020, Amelia played Blackjack and won $2000. However, Addison was not that lucky and lost S1000. a) What filing status do you recommend for Amelia and Addison. b) What is Amelia and Addison Gross income. (Provide detailed explanation on why or why not you include certain items. Failing to provide explanation will got point deducted) c) What is Amelia and Addison Adjustments/For AGI deduction (Provide detailed explanation on why or why not you include certain items. Failing to provide explanation will got point deducted) d) What is Amelia and Addison total Itemized deduction. (Provide detailed explanation on why or why not you include certain items. Failing to provide explanation will got point deducted) e) What is Amelia and Addison standard deduction? Show calculation and explanation if needed. f) What is Amelia and Addison total taxable income? Filing status Married Jointly NOTES 45,000 (-) 45,000 24,800 24,800 200 Gross Income Adjustments (Above the Line deductions) Adjusted Gross Income (AGI) From AGI deduction: Greater of (a) Standard deduction OR (b) Itemized deduction Deduction for Qual. Business Income Taxable income Marginal Tax rate Income tax liability Credit Prepayment Tax due or (Tax refund) 20,200 129 2,029 (-) 2,029 Fed income tax brackets Tax rate Husband Wific Both wife and husband Tax rate Single Taxable income bracket Tax owed 10%50 to 9.875 10% of taxable income 12% 89,876 to $40,125 $987.50 plus 12% of the amount over $9.875 229 540,126 to $85.525 54.617.50 plus 22% of the amount over $40,125 24% 585.526 to $163_300 $14.605.50 plus 20% of the amount over $85.525 3295163,301 to $207,350 $33.271.50 plus 32% of the amount over S163,300 35% $207,351 to $$18.400 547.367.50 plus 35% of the amount over $207,350 37% 5518,401 or more $156,235 plus 37% of the amount over $518,400 Married filling jointly Taxable income bracket Tax owed 10% 50 to $19,750 10% of taxable income 12% $19,751 to $80,250 $1,975 plus 12% of the amount over $19.750 22% 580,251 to $171,050 $9.235 plus 22% of the amount over $0,250 24%8171,051 to $326,600 $29.211 plus 24% of the amount over $171,050 32% 5326,601 to $414,700 $66.543 plus 32% of the amount over $326,600 35% 5414,701 to 5622,050 $94.735 plus 35% of the amount over $414.700 37%$622,051 or more $167.307.50 plus 37% of the amount over $622,050 Married filing Meparately Taxable income bracket Tax owed 10% 50 to $9,875 10% of taxable income 12% 89.876 to $40,125 $987.50 plus 12% of the amount over $9.875 22% 540,126 to 585,525 $4.617.50 plus 22% of the amount over $40.125 24% 585.526 to $163,300 $14.605.50 plus 24% of the amount over $85.525 32% S163,301 to $207,350 $33.271.50 plus 32% of the amount over $163.300 35% $207,351 to $311,025 $47.367.50 plus 35% of the amount over $207,350 37% $11.026 or more $83.653.75 plus 37% of the amount over $311,025 Head of household Taxable income bracket Tax owed 10% 50 to $14,100 10% of taxable income 12% $14,101 to $53,700 $1,410 plus 12% of the amount over $14,100 22% 553,701 to $85,500 56,162 plus 22% of the amount over $53,700 24% 585,501 to $163,300 $13,158 plus 24% of the amount over $85,500 32%8163,301 to $207,350 $31.830 plus 32% of the amount over S163,300 35%$207,351 to $$18.400 $45.926 plus 35% of the amount over $207,350 37% $518,401 or more S154.793.50 plus 37% of the amount over $518,400 Tax rate Tax rate 2020 Standard Deduction Filing Status Deduction Amount Single Married Piling Jointly Head of Household $12,4001 524.800 $18,650 2020 Child Tax Credit S2000/child 2020 Tax Rates on Long Term Capital Gains For Unmarried Individuals For Married Individuals Filing Joint Returns For Heads of Household Tax Rate Taxable income Over SO SO $80,000 S496,600 $53,600 $469,050 15% $40.000 20% $441,450 Additional Net Investment Incore Tax 3.80% MAGI above $200,000 MAGI above $250,000 MAGI above $200.000 Husband Wife 30,000 50,000 20.125 amount over $9.875 camount over $40,125 the amount over $85.525 the amount over $16.100 the amount over $207,350 amount over $318.400 3.4025 6.790 Taxif each filing separa 10.1925 Both wife and husband Tax joint marriage 80,000 9.205 amount over $19.750 amount over SN3350 camount over $171,050 e amount over $326,600 e amount over $414,700 of the amount over $622,050 e amount over $9.875 the amount over $40,125 the amount over $85.525 the amount over $163,300 the amount over $207,350 the amount over $311,025 amount over $14.100 amount over $53,700 e amount over $85.500 e amount over $163,300 e amount over $207,350 of the amount over $518,400 bital Gains als Filing Joint Returns For Heads of Households SO $80,000 $496,600 SO $53,600 $469,050 MAGI above $200,000 Fed income tax brackets Single Tax rate Taxable income bracket Tax owed 10%|S0 to $9.875 10% of taxable income 129 89,876 to 40,125 5987.50 plus 12% of the amount over $9.875 22% 540,126 to $85.525 54,617.50 plus 22% of the amount over $40,125 24% 585,526 to $163,300 $14,605.50 plus 24% of the amount over $85,525 32% S163,301 to $207,350 $33,271.50 plus 32% of the amount over $163,300 35%$207,351 to $518,400 S47,367.50 plus 35% of the amount over $207,350 37% $518,401 or more S156,235 plus 37% of the amount over $518,400 Married ning jointly Tax rate Taxable income bracket Tax owed 10% 50 to $19,750 10% of taxable income 12% $19,751 to $80,250 $1,975 plus 12% of the amount over $19,750 22% 580,251 to $171,050 $9,235 plus 22% of the amount over $80,250 24%8171,051 to $326,600 $29,211 plus 24% of the amount over $171,050 32%8326,601 to $414,700 $66,543 plus 32% of the amount over $326,600 35%414,701 to $622,050 $94.735 plus 35% of the amount over $414,700 37%$622,051 or more S167,307.50 plus 37% of the amount over $622,050 Married filling separately Tax rate Taxable income bracket Tax owed 10% 50 to $9.875 10% of taxable income 12% 89,876 to S40,125 $987.50 plus 12% of the amount over $9,875 22% 540,126 to $85,525 S4,617.50 plus 22% of the amount over $40,125 24% 585,526 to $163,300 S14,605.50 plus 24% of the amount over $85,525 32% S163,301 to $207,350 $33,271.50 plus 32% of the amount over $163,300 35%$207,351 to $311,025 $47,367.50 plus 35% of the amount over $207,350 37%$311,026 or more $83,653.75 plus 37% of the amount over $311,025 Head of household Tax rate Taxable income bracket Tax owed 10% 50 to $14,100 10% of taxable income 12% S14,101 to $53,700 $1,410 plus 12% of the amount over $14,100 22% 553,701 to $85,500 $6,162 plus 22% of the amount over $53,700 24% 585,501 to $163,300 $13,158 plus 24% of the amount over $85,500 32% 5163,301 to $207,350 $31.830 plus 32% of the amount over $163,300 35%$207,351 to $518,400 $45.926 plus 35% of the amount over $207,350 37% 5518,401 or more S154,793.50 plus 37% of the amount over $518,400 Taxable income 20.200 Single Threshold Rate Cummulative tax 0 10 0 9.875 12% 9875 40,125 22% 4,6175 85,525 14,605 163,300 33.271.5 207,350 35% 47,3675 518,400 37% 156,235 Married filing jointly Threshold Rate Cummulative tax 0 10% 0 19.750 12% 1,975 80,250 22% 9,235 171.050 24% 29,211 326,600 32% 66,543 414.700 35% 94,735 622,050 37% 167,307.5 Married filling separately Threshold Cummulative tax 0 10% 0 9,875 12% 9875 40,125 22% 4,6175 85,525 24% 14,605 163,300 32% 33.271.5 207,350 35% 47,3675 311,025 37% 83.653.75 Head of household Threshold Rate Cummulative tax 0 10% 0 14,100 1.410 53,700 22% 6,162 85,500 24% 13.158 163,300 31.830 207,350 35% 45.926 $18.400 37% 154.793.5 Rate
