Federal Income Taxation Problem Question

1. Amelia and Addison are your grandparents. Amelia and Addison asked you to help them with their tax return in 2020. Below is a few financial info that they provide you:

• Both Amelia and Addison main source of income is from their rental house. In 2020, they earned $48,000 in total from their rental properties.
• In the middle of 2020, Addison had heart attack and must go to the emergency room. The total medical cost that Addison paid out of pocket was $5000
• Knowing that her dad had a bad accidence, Alice came over to visit and gave the old couple a $10,000 check in September 2020. The couple did not immediately cash in the check but plan to only cash it in January 2021. Amelia told you that she hopes that by doing so, she would not have to recognize the amount in 2020.
• Amelia and Addison paid $24,000 in total on their Texas property tax in 2020
• On their Vegas trip in early 2020, Amelia played Blackjack and won $2000. However, Addison was not that lucky and lost $1000.

a) What filing status do you recommend for Amelia and Addison.

b) What is Amelia and Addison Gross income. (Provide detailed explanation on why or why not you include certain items.)

c) What is Amelia and Addison Adjustments/ For AGI deduction. (Provide detailed explanation on why or why not you include certain items.)

d) What is Amelia and Addison total Itemized deduction. (Provide detailed explanation on why or why not you include certain items.)

f) What is Amelia and Addison standard deduction? Show calculation and explanation if needed.

e) What is Amelia and Addison total taxable income?