income tax planning

answer I

1. (40 points) Your new clients, Jim and Nancy Billings (both under age 65 and not blind), have two dependent children under age 17. They provide you with the following information: a. Nancy works as a pediatrician in a local hospital. Her W-2 shows wages of $125,000 with $20,000 in Federal income tax withholdings and $10,000 in state income tax with holdings. b. Jim earned $10,000 driving a bus for the local school. His W-2 also shows $2,000 of Federal income tax withholdings and $1,000 of state income tax withholdings. c. On December 26th, the Billings donated Netflix stock to a 501(C)3 charitable organization. They paid $10,000 for the stock two ago and it was worth $18,000 on the date of gift. d. The Billings had the following stock transactions: ABC Stock purchased on three years ago for $3,000 was sold for $7,000 this year. XYZ Stock purchased in April of this year for $18,000 was sold for $10,000 this year. e. Mortgage interest of $12,000 and proberty taxes of $10,000 were paid this year. f. Unreimbursed Medical expenses of $7,000 were paid this year. 8. Municipal Bond interest of $4,000 was received this year. h. The Billings paid Gemmiti CPA $2,000 to prepare their tax returns. i The Billings paid Abuzem Daycare $14,000 to take care of their two children. i The Billings took out a $50,000 home equity loan to buy a boat. They paid $3,000 in interest on the loan this year. k. Nancy paid $6,000 on her student loan