COBU110 20 Points Written Assignment - Preparation of the Tax Return. Fall 2016 Please prepare the following assignment and upload it on blackboard Safe Assign no later than 18th Nov,2016. Name_________________________________ ID_____________ Tax return preparation assignment Financial Planning Cases Case 1: The Thomson's Calculate Their Income Taxes Several years have gone by since Harry and Belinda graduated from college and started their working careers. They both earn good salaries. They believe that they are paying too much in federal income taxes. The Thomsons' total income last year included Harry's salary of $73,000 and Belinda's salary of $84,000. She contributed $3000 to her 401 (k) for retirement. She earned $600 in interest on savings and checking and $4000 interest income from the trust that is taxed in the same way as interest income from checking and savings accounts. Harry contributed $3000 into a traditional IRA. (a) What is the Thomsons' reportable gross income on their joint tax return? (b) What is their adjusted gross income? (c) What is the total value of their exemptions? (d) How much is the standard deduction for the Thomson's? (e) The Thomson's are buying a home that has monthly mortgage payments of $3000, or $36,000 a year. Of this amount, $32,800 goes for interest and real estate property taxes. The couple has a $14,000 in other itemized deductions. Using these numbers an Table 1 given below, calculate their taxable income and tax liability. (f) Assuming they had a combined $22,000 in federal income taxes withheld, how much of a refund will the Thomson's receive? (g) What is their marginal tax rate? (h) List three additional ways that the Thomson's might reduce their tax liability next year. Table 1. 2014 Taxable Income Brackets and Rates Rate Single Filers Married Joint Filers Head of Household Filers 10% $0 to $9,075 $0 to $18,150 $0 to $12,950 15% $9,076 to $36,900 $18,151 to$73,800 $12,951 to $49,400 25% $36,901 to $89,350 $73,801 to $148,850 $49,401 to $127,550 28% $89,351 to $186,350 $148,851 to $226,850 $127,551 to $206,600 33% $186,351 to $405,100 $226,851 to $405,100 $206,601 to $405,100 35% $405,101 to 406,750 $405,101 to 457,600 $405,101 to $432,200 39.6% $406,751+ Source: Internal Revenue Service $457,601+ $432,201+