58. Communications

Decision Making

Planning

Tax Computation Problem

Martin S. Albert (Social Security number 111-11-1111) is 39 years old and is married to Michele R. Albert (Social Security number 123-45-6789). The Alberts live at 512 Ferry Road, Newport News, VA 23601. They file a joint return and have two dependent children, Charlene, age 16, and Jordan, age 18. Charlenes Social Security number is 123-45-6788, and Jordans Social Security number is 123-45-6787. In 2022, Martin and Michele had the following transactions:

Michele received $120,000 in salary from Red Steel Corporation, where she is a construction engineer. Withholding for Federal income tax was $10,750. The amounts withheld for FICA taxes were as follows: $7,440 ($120,000 6.2%) for Social Security and $1,740 ($120,000 1.45%) for Medicare. Michele worked in Mexico from January 1, 2021, until February 15, 2022. Her $120,000 salary for 2022 includes $18,000 she earned for January and one-half of February 2022 while working in Mexico.

Martin and Michele received $400 interest on Montgomery County (Virginia) school bonds.

Martin received $2,300 interest from a Bahamian bank account.

Michele received 50 shares of Applegate Corporation common stock as a stock dividend. The shares had a fair market value of $2,500 at the time Michele received them, and she did not have the option of receiving cash.

Martin and Michele received a $1,200 refund on their 2021 Virginia income taxes. Their itemized deductions in 2021 totaled $34,000 and included state taxes of $7,400.

Michele paid $6,600 alimony to her former husband, Benjamin P. Morgan (Social Security number 123-45-6786). The divorce was finalized in March 2016.

Martin and Michele kept the receipts for their sales taxes paid of $1,100.

Martin and Micheles itemized deductions were as follows:

State income tax paid and withheld totaled $5,100.

Real estate taxes on their principal residence were $3,700.

Mortgage interest on their principal residence was $2,500.

Part 1Tax Computation

Compute the Alberts net tax payable (or refund due) for 2022.