Question
Maria is a Paralegal at Dewey, Cheatham & Howe, a law firm in Arizona. Information about her 2018 income and expenses is as follows: Income
Maria is a Paralegal at Dewey, Cheatham & Howe, a law firm in Arizona. Information about her 2018 income and expenses is as follows:
Income received
Salary $150,000
Taxes withheld from Salary:
Federal Income tax $30,000
State Income Tax 9,000
Social Security Tax 7,961
Medicare Tax 2,175
Interest income from bank 6,000
Dividend income from U.S. Stocks 4,000
Short-Term Capital Gain 2,000
Long-Term Capital Gain 3,000
State income tax refund from last year 500
Expenses Paid:
Unreimbursed dental and eye-care costs 1,800
Property taxes on her home 3,900
Fees paid to town for garbage pickup 400
Stock donated to American Red Cross; FMV $5,000;
Purchased in 2014 for $2,500
Home mortgage interest 10,000
Interest on car loan 300
In addition, she operates a small pottery activity to try to make some money. This year she reported the following income and expenses from this activity:
Revenue from sale of pottery $ 9,000
Depreciation on potter's wheel (3,000)
Property taxes on shed where she does pottery (1,200)
Supplies used such as clay, etc. (6,500)
COMPUTE Maria's TAXABLE INCOME for 2018. Show all supporting computations.
Maria is single, and she elects to itemize her deductions each year. Also assume that her tax profile was similar in the preceding year.
Use U.S. tax laws from 2018.
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