Lucy and Richard Kupau are a married and have one dependent child, Miu who is 5 years old. The Kupaus live in Texas where there is no state income tax and all are U.S. citizens.

Financial Information

• Richard Salary as a marketing executive $395,000 (Medicare withheld at 1.45%)
• Lucys Salary as a merchandising consultant $222,000 (Medicare withheld at 1.45%)
• Unemployment Compensation $8,000
• Interest Income from corporate bonds $16,000
• Interest Income from Wells Fargo CDs $5,250
• Interest Income from State of Texas Bonds $5,500
• Scholarship for Lucy (educational expenses = $6,325) $7,500 (Lucy went back to school)
• Inheritance from Grandmother $550,000
• Gift from uncle $175,000
• Annuity Payments (investment=$30K, payout=120K) $36,000
• Long-term capital gains $32,000
• Dividends from Microsoft (Qualifying) $18,350
• Roth IRA contribution for Richard $5,000
• Roth IRA contribution for Lucy $5,000
• Mortgage Interest Principal ($1,500,000 ) $72,000 (Mortgage origination 2018)
• Charitable Contributions to St. Ludmilas Church $42,200
• Non cash charitable contribution to Cancer Society $4,500
• Un-reimbursed payments to medical doctors $67,500 (Richard is fighting cancer)
• Payments for non-prescriptions drugs (aspirin, allergy) $3,250
• Investment interest expense $62,250
• Non-cash contribution of clothing to goodwill $4,000
• Real Estate Taxes residence $18,250
• Federal Income tax withholding $150,000

Questions

1. What is the Kupaus gross income for 2019
2. What is the Kupaus adjusted gross income for 2019
3. What is the Kupaus itemized deductions for 2019
4. What is the Kupaus taxable income for 2019
5. What is the Kupaus tax liability for 2019
6. What is the Kupaus refund or tax due for 2019

Appendix C 2019 Income Tax Rates To va INDIVIDUAL TAX RATES Married Filing Jointly and Surviving Spouse If taxable income is: The tax is: Not over $19,400 10% of taxable income Over $19.400 but not over $78,950 $1.940.00 + 12% of excess over $19.400 Over $78,950 but not over $168,400 $9,086.00 + 22% of excess over $78,950 Over $168,400 but not over $321,450 $28,765.00 +24% of excess over $168.400 Over $321,450 but not over $408.200 $65.497.00 + 32% of excess over $321.450 Over $408.200 but not over $612,350 $93.257.00 + 35% of excess over $408.200 Over $612,350 $164.709.50 +37% of excess over $612350 If taxable income is: Not over $9.700 Over $9.700 but not over $39,475 Over $39,475 but not over $84.200 Over $84,200 but not over $160,725 Over $160,725 but not over $204,100 Over $204,100 but not over $306,175 Over $306,175 Married Filing Separately The tax is: 10% of taxable income $970.00 + 12% of excess over $9,700 $4,543.00 + 22% of excess over $39.475 $14,382.50 + 24% of excess over $84.200 $32.748.50 + 32% of excess over $160,725 $46.628.50 + 35% of excess over $204,100 $82.354.75 + 37% of excess over $306,175 Heads of Household If taxable income is: The tax is: Not over $13,850 Over $13,850 but not over $52,850 Over $52,850 but not over $84.200 Over $84,200 but not over $160,700 Over $160,700 but not over $204,100 Over $204,100 but not over $510,300 Over $510,300 10% of taxable income $1,385.00 + 12% of excess over $13,850 $6,065.00 + 22% of excess over $52,850 $12.962.00 +24% of excess over $84.200 $31.322.00 + 32% of excess over $160,700 $45,210.00 + 35% of excess over $204,100 $152,380.00 + 37% of excess over $510,300