part 1
Part 2 Assume the same facts as in part 1 for Carl and Renee Simpson except Carl received $12,000 from an income replacement insurance policy he purchased and 10,000 from an income replacement insurance policy purchased by his employer while he was unable to work because of shoulder surgery. Daniel received a scholarship from State University (gifted student). They still provide over half of Daniel's support. The scholarship provided the following: Tuition and fees 5,000 Housing and meals 4,500 Books and supplies 1,000 Starting in 2010, Carl and Renee have been purchasing Series EE bonds in their name to use for the higher education of their children (grandchildren). During the year they cash in $20,000 of the bonds for Daniel and JoAnn to use for college expenses. Of the amount. $7,500 represents interest. Of the $20,000, $3,000 is used for tuition and fees. 5.500 is used for dormitory fees and the rest is used for meal plans. 1. Determine the effect of the income replacement insurance policies on their gross income. 2. Determine the effect of the scholarship on Daniel's gross income and Renee and Carl's tax return 3. Determine the tax consequences for Carl and Renee of the Series EE bonds. Show all your work. You just have to tell me this affects the results in Part 1(do not redo that tax return) Part 1 Carl and Renee Simpson are 63 and 62 respectively. They file a joint return. They had income for 2020 as follows: Pension from former employer (Carl) 16,700 Pension from former employer (Renee) 25,950 Interest income from savings account 600 Interest income from City of Miami bonds 3,200 Dividends from Apple stock held for over one year 1,600 Annuity 4,725 Social Security (Carl) 18,672 Social Security (Renee) 21.000 Wages (Carl) 150.000 Wages (Renee) 202.000 The cost of the annuity was $52,000 and they expect to receive a total of 10 years of payments of S525 a month. They have received 9 payments through 2020. They had the following expenses as well: State income taxes 4.000 Income tax withheld 80.000 Property taxes on home 6.500 Mortgage interest (all is deductible) 22.000 Charitable contributions (cash) 6.800 Sales tax paid 1.000 They also provide over half of the total support of each of the following individuals, all of whom still live at home. Their only child. Jennifer, was killed in an automobile accident 10 years ago and they have adopted her 3 children (their grandchildren). 1. Daniel, their son (grandson), age 22 a full-time student who married on Oct. 1. has no income of his own and did not file a inintem They also provide over half of the total support of each of the following individuals, all of whom still live at home. Their only child, Jennifer, was killed in an automobile accident 10 years ago and they have adopted her 3 children (their grandchildren). 1. Daniel, their son (grandson), age 22 a full-time student, who married on Oct. 1, has no income of his own and did not file a joint return with his wife, Annie, who earned $11,000 during 2020. 2. Matthew, their son (grandson), age 16, graduated high school in May 2020. He is taking a leap year and will not begin college until 2021. He had total gross income of 6,300 in 2020. 3. JoAnn, their oldest child (grandchild), age 27, is a full-time graduate student with gross income of $4.250 Compute Carl and Renee's income tax payable (or refund due) Show all your work. Tax rates for 2020 Maximum for this bracket 10% 0-19.750 1975 12% 19,751-80.250 7260 22% 80.251-171.050 19976 24% 171.051-326,600 37332 32% 326,601-414,700 ? Dividend Tax Rate: 15% for income $80.001-496.600 Dividend Tax Rate: 15% for income $80,001-496,600 Gross Income/ AGI (20 points) Deductions from AGI (15 points) Taxable income (5 points) Income Tax (5 points) Assume they are not responsible for any Alterative Minimum Tax and they have paid all the Social Security, Medicare, and state taxes required. Remember Dividends are not taxed at same rate as income.: Part 2 Assume the same facts as in part 1 for Carl and Renee Simpson except Carl received $12,000 from an income replacement insurance policy he purchased and 10,000 from an income replacement insurance policy purchased by his employer while he was unable to work because of shoulder surgery. Daniel received a scholarship from State University (gifted student). They still provide over half of Daniel's support. The scholarship provided the following: Tuition and fees 5,000 Housing and meals 4,500 Books and supplies 1,000 Starting in 2010, Carl and Renee have been purchasing Series EE bonds in their name to use for the higher education of their children (grandchildren). During the year they cash in $20,000 of the bonds for Daniel and JoAnn to use for college expenses. Of the amount. $7,500 represents interest. Of the $20,000, $3,000 is used for tuition and fees. 5.500 is used for dormitory fees and the rest is used for meal plans. 1. Determine the effect of the income replacement insurance policies on their gross income. 2. Determine the effect of the scholarship on Daniel's gross income and Renee and Carl's tax return 3. Determine the tax consequences for Carl and Renee of the Series EE bonds. Show all your work. You just have to tell me this affects the results in Part 1(do not redo that tax return) Part 1 Carl and Renee Simpson are 63 and 62 respectively. They file a joint return. They had income for 2020 as follows: Pension from former employer (Carl) 16,700 Pension from former employer (Renee) 25,950 Interest income from savings account 600 Interest income from City of Miami bonds 3,200 Dividends from Apple stock held for over one year 1,600 Annuity 4,725 Social Security (Carl) 18,672 Social Security (Renee) 21.000 Wages (Carl) 150.000 Wages (Renee) 202.000 The cost of the annuity was $52,000 and they expect to receive a total of 10 years of payments of S525 a month. They have received 9 payments through 2020. They had the following expenses as well: State income taxes 4.000 Income tax withheld 80.000 Property taxes on home 6.500 Mortgage interest (all is deductible) 22.000 Charitable contributions (cash) 6.800 Sales tax paid 1.000 They also provide over half of the total support of each of the following individuals, all of whom still live at home. Their only child. Jennifer, was killed in an automobile accident 10 years ago and they have adopted her 3 children (their grandchildren). 1. Daniel, their son (grandson), age 22 a full-time student who married on Oct. 1. has no income of his own and did not file a inintem They also provide over half of the total support of each of the following individuals, all of whom still live at home. Their only child, Jennifer, was killed in an automobile accident 10 years ago and they have adopted her 3 children (their grandchildren). 1. Daniel, their son (grandson), age 22 a full-time student, who married on Oct. 1, has no income of his own and did not file a joint return with his wife, Annie, who earned $11,000 during 2020. 2. Matthew, their son (grandson), age 16, graduated high school in May 2020. He is taking a leap year and will not begin college until 2021. He had total gross income of 6,300 in 2020. 3. JoAnn, their oldest child (grandchild), age 27, is a full-time graduate student with gross income of $4.250 Compute Carl and Renee's income tax payable (or refund due) Show all your work. Tax rates for 2020 Maximum for this bracket 10% 0-19.750 1975 12% 19,751-80.250 7260 22% 80.251-171.050 19976 24% 171.051-326,600 37332 32% 326,601-414,700 ? Dividend Tax Rate: 15% for income $80.001-496.600 Dividend Tax Rate: 15% for income $80,001-496,600 Gross Income/ AGI (20 points) Deductions from AGI (15 points) Taxable income (5 points) Income Tax (5 points) Assume they are not responsible for any Alterative Minimum Tax and they have paid all the Social Security, Medicare, and state taxes required. Remember Dividends are not taxed at same rate as income
