Betty Johnson (age 61) provides 100 percent of the support for her two children, Amy (age 6) and Brad (age 23), and her mom Judy (age 87). Amy and Brad live with Betty. Judy lives in her own apartment (the cost of which is entirely paid by Betty).

Betty Johnson (age 61) provides 100 percent of the support for her two children, Amy (age 6) and Brad (age 23), and her mom Judy (age 87). Amy and Brad live with Betty. Judy lives in her own apartment (the cost of which is entirely paid by Betty). Amy had no income in 2021. Brad earned $6,100 in 2021 from his part-time job. Judy received $4,200 of interest from a State of Tennessee bond and $12,000 from her Social Security benefits. In additional to working full time, Betty operates a small convenience store as a sole proprietor. Betty received and paid the following items in 2021: Receipts: Betty's salary Gross receipts from Betty's sole proprietorship Interest on savings account Interest on State of Tennessee bonds Interest on U.S. Treasury Bills Interest on Corporate bond Qualified dividend received from ABC Corporation Gift from Betty's dad Life insurance proceeds received on death of Betty's mother Long-term capital gain (on asset held for 2 years) Short-term capital loss (on asset held for 3 months) Gambling winnings $ 110,000 82,000 4,000 4,500 1,500 2,200 2,000 5,000 30,000 2,000 (6,000) 1,000 Disbursements: Total deductible expenses from Betty's sole proprietorship 62,000 Payment to day care center to take care of Amy while Betty works 12,000 Payment of alimony to Betty's ex-spouse (from 2019 divorce settlement) 9,000 Payment of child support to Betty's ex-spouse 12,000 Prescription drugs 500 Non-prescription drugs 1,000 Betty's share of health insurance premiums (Betty is covered by a health insurance plan through her employer) 5,200 Hospital & doctor bills 11,500 Dental expenses 1,000 Contribution to Roth IRA by Betty 6,000 Withholding for federal income taxes (from Betty's W-2) 14,000 Withholding for state income taxes (from Betty's W-2) 2,000 State income taxes paid on April 15, 2021, when Betty filed her 2020 state income tax return. 200 Federal income taxes paid on April 15, 2021 when Betty filed their 2020 federal income tax return 800 Sales Taxes (from IRS sales tax calculator) 2,800 Gambling losses 3,000 Real property taxes on principal residence 4,700 Real property taxes on hunting land owned by Alan 3,000 Interest on home mortgage (on $400,000 loan used to purchase home) 11,000 Interest on home equity loan (proceeds were used to take a vacation) 1,800 Interest on personal visa card 950 Cost of new washing machine 2,000 Gift to Betty's aunt 4,000 Cash contribution to church 2,000 In addition to the above disbursements, Alan and Betty made a charitable contribution of stock to State University during 2021. Alan and Betty purchased the stock on 1/28/2001 for $1,000 and contributed it to State University on 6/15/21. The fair market value of the stock on the date of the contribution was $4,000. Required: Follow the individual income tax formula and calculate Betty's (1) total income, (2) adjusted gross income, (3) taxable income, (4) total tax liability, and (5) amount due or refund upon filing her tax return. Show all your work and clearly label your answer. 2021 Tax Rate Schedules Individuals Schedule X-Single If taxable income is over:But not over: The tax is: $ 0 $ 9,950 10% of taxable income $ 9,950 $ 40,525 $995 plus 12% of the excess over $9,950 $ 40,525 $ 86,375 $4,664 plus 22% of the excess over $40,525 $ 86,375 $ 164,925 $14,751 plus 24% of the excess over $86,375 $ 164,925 $ 209,425 $33,603 plus 32% of the excess over $164,925 $ 209,425 $ 523,600 $47,843 plus 35% of the excess over $209,425 $ 523,600 $157,804.25 plus 37% of the excess over $523,600 Betty Johnson (age 61) provides 100 percent of the support for her two children, Amy (age 6) and Brad (age 23), and her mom Judy (age 87). Amy and Brad live with Betty. Judy lives in her own apartment (the cost of which is entirely paid by Betty). Amy had no income in 2021. Brad earned $6,100 in 2021 from his part-time job. Judy received $4,200 of interest from a State of Tennessee bond and $12,000 from her Social Security benefits. In additional to working full time, Betty operates a small convenience store as a sole proprietor. Betty received and paid the following items in 2021: Receipts: Betty's salary Gross receipts from Betty's sole proprietorship Interest on savings account Interest on State of Tennessee bonds Interest on U.S. Treasury Bills Interest on Corporate bond Qualified dividend received from ABC Corporation Gift from Betty's dad Life insurance proceeds received on death of Betty's mother Long-term capital gain (on asset held for 2 years) Short-term capital loss (on asset held for 3 months) Gambling winnings $ 110,000 82,000 4,000 4,500 1,500 2,200 2,000 5,000 30,000 2,000 (6,000) 1,000 Disbursements: Total deductible expenses from Betty's sole proprietorship 62,000 Payment to day care center to take care of Amy while Betty works 12,000 Payment of alimony to Betty's ex-spouse (from 2019 divorce settlement) 9,000 Payment of child support to Betty's ex-spouse 12,000 Prescription drugs 500 Non-prescription drugs 1,000 Betty's share of health insurance premiums (Betty is covered by a health insurance plan through her employer) 5,200 Hospital & doctor bills 11,500 Dental expenses 1,000 Contribution to Roth IRA by Betty 6,000 Withholding for federal income taxes (from Betty's W-2) 14,000 Withholding for state income taxes (from Betty's W-2) 2,000 State income taxes paid on April 15, 2021, when Betty filed her 2020 state income tax return. 200 Federal income taxes paid on April 15, 2021 when Betty filed their 2020 federal income tax return 800 Sales Taxes (from IRS sales tax calculator) 2,800 Gambling losses 3,000 Real property taxes on principal residence 4,700 Real property taxes on hunting land owned by Alan 3,000 Interest on home mortgage (on $400,000 loan used to purchase home) 11,000 Interest on home equity loan (proceeds were used to take a vacation) 1,800 Interest on personal visa card 950 Cost of new washing machine 2,000 Gift to Betty's aunt 4,000 Cash contribution to church 2,000 In addition to the above disbursements, Alan and Betty made a charitable contribution of stock to State University during 2021. Alan and Betty purchased the stock on 1/28/2001 for $1,000 and contributed it to State University on 6/15/21. The fair market value of the stock on the date of the contribution was $4,000. Required: Follow the individual income tax formula and calculate Betty's (1) total income, (2) adjusted gross income, (3) taxable income, (4) total tax liability, and (5) amount due or refund upon filing her tax return. Show all your work and clearly label your answer. 2021 Tax Rate Schedules Individuals Schedule X-Single If taxable income is over:But not over: The tax is: $ 0 $ 9,950 10% of taxable income $ 9,950 $ 40,525 $995 plus 12% of the excess over $9,950 $ 40,525 $ 86,375 $4,664 plus 22% of the excess over $40,525 $ 86,375 $ 164,925 $14,751 plus 24% of the excess over $86,375 $ 164,925 $ 209,425 $33,603 plus 32% of the excess over $164,925 $ 209,425 $ 523,600 $47,843 plus 35% of the excess over $209,425 $ 523,600 $157,804.25 plus 37% of the excess over $523,600