Amanda Johnson, age 40, is single and has a minor child, Jason who is 15. Amanda has been divorced from her husband, John, for four years. Amanda works for NBC as an advertising executive and earned a salary of $100,000 for 2020 with $9,000 in Federal income tax withholding and $3,000 in state income tax withholding. She is covered by an employer-sponsored retirement plan.

Amanda has legal custody of Jason and the divorce agreement was finalized in June 2016 which required Amanda to pay John annual alimony payments of $15,000 for the next 12 years or until his death. Amanda provided all of Jason’s support. 

 

Amanda’s mother, Anne, died in 2020. Amanda inherited her mother’s home worth $500,000 and she was the sole beneficiary of Anne’s life insurance policy in the amount of $200,000. Both items were received by her during 2020. 

 

Amanda sold 1,000 shares of Can’t Lose, Inc. stock on December 1, 2020, for $8,000. She originally purchased these shares three years ago for $13,500.

Amanda’s uncle, Jimmy, give her stock in IBM having a value of $4,000 at the time of the gift (which he originally purchased for $3,000) in 2020. Amanda sold the shares for $4,000 in 2020. 

 

Amanda received the following items: 

Interest Income of $2,000 from BofA 

Gift Card Prize from Vons Groceries of $500 

Qualified dividends from IBM of $1,500 

Interest Income from Pomona City Bonds of $4,000 

Share of partnership income from CPP Partnership of $5,000 but only received $4,500

* *Assume that the Qualified business income deduction applies but the W-2 wage limitation does not.

 

Amanda made the following payments during 2020: 

Charitable contributions of $2,500 to My Church and $1,500 to university.

 $5,000 paid to P. Valley Hospital for a friend’s medical expenses. 

Mortgage interest for her home in the amount of $8,000.

 Property taxes on her home of $3,200 and gardening expenses of $800. 

Estimated Federal Income Taxes of $3,000 and Estimated State Income taxes of $1,000. Medical expenses for herself of $5,000 and $500 for Jason but was reimbursed by insurance in the amount of $1,500. 

IRA Contribution in the amount of $6,000. 

Contribution of $250 to various political campaigns. 

$800 in sales tax that are supported by receipts.

 

1-What is Amanda’s filing status?

2-Calculate Amanda’s Gain/Loss from her stock transactions.

3-Calculate Amanda’s Gross Income giving income descriptions and amounts.

4-Calculate Amanda’s Adjusted Gross Income.

5-Calculate Amanda’s Itemized Deductions including the Medical Expense calculation.

6-Will Amanda claim her Itemized Deductions or the Standard Deduction?

7-Calculate Amanda’s Taxable Income starting with Adjusted Gross Income.

8-What items of income are excluded from Gross Income?

9-What expenditures by Amanda are not tax-deductible?