John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2020, John worked as a computer technician at a local university earning a salary of $152,000, and Sandy worked part time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions, and their itemized deductions were well over the standard deduction amount last year. Assume that the Fergusons received an advance rebate of $2,400 in 2020. The Fergusons had qualifying insurance for purposes of the Affordable Care Act (ACA). Use Exhibit 8-9, Tax Rate Schedule, Dividends and Capital Gains Tax Rates, 2020 AMT exemption for reference.

. The Fergusons reported making the following payments during the year: State income taxes of $4,400. Federal tax withholding of $21,000. Alimony payments to John's former wife of $10,000 (divorced in 2014). Child support payments for John's child with his former wife of $4,100. $12,200 of real property taxes. Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer. $3,600 to Kid Care day care center for Samantha's care while John and Sandy worked. $14,000 interest on their home mortgage ($400,000 acquisition debt). $3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car. $15,000 cash charitable contributions to qualified charities. Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000. . . EXHIBIT 8-5 2020 AMT Exemptions Filing Status Exemption Phase-Out Begins at This Level of AMTI Married filing jointly Married filing separately Head of household and single $113,400 56.700 72.900 $1.036.800 518.400 518.400 Phase-Out Complete for This Level of AMTI $1.490.400 745,200 810,000 Tax Rates for Net Capital Gains and Qualified Dividends Rate* 0% 15% 20% Married Filing Jointly $0-$80,000 $80,001 - $496,600 $496,601+ Married Filing Separately $0-$40.000 $40,001 - $248,300 $248,301+ Taxable Income Single SO - $40,000 $40,001 - $441,450 $441,451+ Head of Household SO - $53,600 $53,601 - $469,050 $469,051+ Trusts and Estates SO - $2,650 $2,651 - $13,150 $13,151+ Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: $ 0 $ 19,750 10% of taxable income $ 19,750 $ 80,250 $1,975 plus 12% of the excess over $19,750 $ 80,250 $171,050 $9.235 plus 22% of the excess over $80,250 $171,050 $326,600 $29,211 plus 24% of the excess over $171,050 $326,600 $414,700 566,543 plus 32% of the excess over $326,600 $414,700 $622,050 $94.735 plus 35% of the excess over $414,700 $622,050 $167,307.50 plus 37% of the excess over $622.050 Then the percentage is 35% 34 33 32 31 30 29 If AGI is over S 0 15.000 17,000 19.000 21,000 23,000 25.000 27.000 29,000 31.000 33,000 35,000 37.000 39.000 41,000 43.000 But not over $15.000 17,000 19,000 21,000 23.000 25,000 27.000 29.000 31.000 33,000 35.000 37.000 39,000 41,000 43,000 No limit 28 27 26 25 24 23 22 21 20 a. What is the Fergusons' 2020 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable? (Round your intermediate computations to the nearest whole dollar amount.) Tax refund . The Fergusons reported making the following payments during the year: State income taxes of $4,400. Federal tax withholding of $21,000. Alimony payments to John's former wife of $10,000 (divorced in 2014). Child support payments for John's child with his former wife of $4,100. $12,200 of real property taxes. Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer. $3,600 to Kid Care day care center for Samantha's care while John and Sandy worked. $14,000 interest on their home mortgage ($400,000 acquisition debt). $3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car. $15,000 cash charitable contributions to qualified charities. Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000. . . EXHIBIT 8-5 2020 AMT Exemptions Filing Status Exemption Phase-Out Begins at This Level of AMTI Married filing jointly Married filing separately Head of household and single $113,400 56.700 72.900 $1.036.800 518.400 518.400 Phase-Out Complete for This Level of AMTI $1.490.400 745,200 810,000 Tax Rates for Net Capital Gains and Qualified Dividends Rate* 0% 15% 20% Married Filing Jointly $0-$80,000 $80,001 - $496,600 $496,601+ Married Filing Separately $0-$40.000 $40,001 - $248,300 $248,301+ Taxable Income Single SO - $40,000 $40,001 - $441,450 $441,451+ Head of Household SO - $53,600 $53,601 - $469,050 $469,051+ Trusts and Estates SO - $2,650 $2,651 - $13,150 $13,151+ Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: $ 0 $ 19,750 10% of taxable income $ 19,750 $ 80,250 $1,975 plus 12% of the excess over $19,750 $ 80,250 $171,050 $9.235 plus 22% of the excess over $80,250 $171,050 $326,600 $29,211 plus 24% of the excess over $171,050 $326,600 $414,700 566,543 plus 32% of the excess over $326,600 $414,700 $622,050 $94.735 plus 35% of the excess over $414,700 $622,050 $167,307.50 plus 37% of the excess over $622.050 Then the percentage is 35% 34 33 32 31 30 29 If AGI is over S 0 15.000 17,000 19.000 21,000 23,000 25.000 27.000 29,000 31.000 33,000 35,000 37.000 39.000 41,000 43.000 But not over $15.000 17,000 19,000 21,000 23.000 25,000 27.000 29.000 31.000 33,000 35.000 37.000 39,000 41,000 43,000 No limit 28 27 26 25 24 23 22 21 20 a. What is the Fergusons' 2020 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable? (Round your intermediate computations to the nearest whole dollar amount.) Tax refund