Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer

image text in transcribed

Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer for a manufacturing firm while Jessie runs a craft business from their home. Jessie's craft business consists of making craft items for sale at craft shows that are held periodically at various locations. Jessie spends considerable time and effort on her craft business, and it has been consistently profitable over the years. Joe and Jessie pay interest on a personal loan to pay for Lizzie's college expenses (balance of $35,000). Based on their estimates, determine Joe and Jessie's AGI and complete page 1 of Form 1040 (through line 11) and schedule 1. Assume that the employer portion of the self- employment tax on Jessie's income is $831. Joe and Jessie have summarized the income and expenses they expect to report this year as follows: Income: Joe's salary $129,100 Jessie's craft sales 18,400 Interest from certificate of deposit 1,650 716 Interest from Treasury bond funds Interest from municipal bond funds 920 Income from renting out their personal 800 residence for 10 days Expenditures: 7,482 Social security tax withheld from Joe's wages Cost of Jessie's craft supplies 4,260 Postage for mailing crafts 145 Travel and lodging for craft shows 2,230 Self-employment tax on Jessie's craft income 1,662 College tuition paid for Lizzie 5,780 Interest on loans to pay Lizzie's tuition 3,200 Lizzie's room and board at college 12,620 Cleaning fees and advertising expense associated with renting their residence 600

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

3rd Edition

0136946690, 978-0136946694

More Books

Students also viewed these Accounting questions