1.

Scenario: Mr. Smith is an attorney and Mrs. Smith is an insurance broker. They are married filing jointly.

Total income reported on Form 1040 for the tax year 2020 is $140,000, and the standard deduction is $24,800.

a. Calculate Mr. and Mrs. Smith's taxable income by entering the adjustments from the case study provided in the lesson. Be sure to show your work.

b. Start with gross income minus adjustments to arrive at adjusted gross income and then subtract itemized deductions or standard deduction.

c. Determine if they should take the standard deduction or itemize deductions to arrive at taxable income.

d. Explain why you chose to either itemize or take the standard deduction for each.

10.1.1

1. Mr. Smith's federal withholdings of $10,000 2. Mr. Smith's state withholdings of $6,000 3. Mrs. Smith's federal withholdings of $7,000 4. Mrs. Smith's state withholdings of $2,000 5. Real estate taxes paid on home of $12,000 6. Cash Contributions to church of $9,000 7. Clothing donations to charity that cost $3,000 but have a thrift shop value of $300 8. Contributions to homeless woman totaling $100 9. Unreimbursed medical expenses of $2,000 10. Home mortgage interest of $12,000 11. Interest paid on car loan $2,700 12. Student loan interest $2,500 13. Alimony paid to Mr. Smith's ex-wife for divorce agreement finalized in 2015) totaling $10,000 14. Tax preparation fees $700 15. Cost to replace roof on personal residence for normal wear and tear $15,000 16. Unreimbursed cost for Mr. Smith to attend continuing education conference totaling $3,300