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PAUL TURNER INDIVIDUAL TAX RETURN PROBLEM Questions: What is the net Form W-2 wages? What is miscellaneous income? What is Schedule B income (Interest and
PAUL TURNER INDIVIDUAL TAX RETURN PROBLEM
Questions:
- What is the net Form W-2 wages?
- What is miscellaneous income?
- What is Schedule B income (Interest and dividends)?
- What is Schedule C net income (Business income)?
- What is Schedule D net income (Capital gains and losses)?
- What is Schedule E depreciation (Rental property)?
- What is Schedule E net income (Rental income & Sub-S income)?
- What is the total For AGI deductions?
- What is Adjusted Gross Income?
- What is the Schedule A deduction for taxes?
- What is the Schedule A deduction for interest expense?
- What is the Schedule A deduction for charitable contributions?
- What is the Schedule A total itemized deductions?
- What is the qualified business income deduction?
- What is taxable income?
- What is the tax on ordinary income?
- What is the tax on long-term capital gain (loss) and qualified dividends?
- What is the self-employment tax?
- What is the kiddie tax?
- What is the balance due or (refund)?
Facts:
- Paul Turner is single and has two children, Allen and Lee Ann, from his previous marriage. Allen lives with Paul and Paul provides more than half of his support. In the current year, Allen earned $300 of interest income and $5,000 working at a fast-food restaurant. Allen graduated from high-school in December 2017 and was not a registered student during 2018. Lee Ann lives with her mother, Wilma (Lee Ann lived with Wilma for all of the current year). Wilma provides more than half of Lee Ann's support. Paul pays alimony $400 per month to Wilma pursuant to a divorce degree entered into in 2014. The payments are to continue until Lee Ann reaches age 18, when they will be reduced to $250. Paul uses the cash method of accounting and a calendar year for reporting. Paul's birthday is May 31, 1977. Allen's birthday is October 5, 2000. Lee Ann's birthday is December 1, 2004. Paul prefers to report any kiddie tax on his tax return.
- Paul is employed as a nuclear engineer with Atom Systems Consultants, Inc. (ASCI). Paul's pay stubs indicate that he had $7,320 withheld in federal taxes, $4,897 in state taxes. He earned $80,000 of wages subject to employee Social Security taxes and Medicare taxes. ASCI has an extensive fringe benefits program for its employees.
- Paul earned salary of $82,500 (before subtracting his 401(k) and flexible spending plan contributions and before adding any additional possible income items described in paragraphs 4-7, 11). He contributed $6,500 to his 401(k) account, and he contributed $2,600 to his flexible spending account.
- ASCI paid $497 of whole life insurance premiums to cover Paul's personal whole life insurance policy. ASCI also paid health club dues of $825 to a nearby health club on Paul's behalf.
- Taking advantage of ASCI's educational assistance program, during the fall Paul enrolled in two graduate engineering classes at a local college. ASCI paid his tuition, fees, and other course-related costs of $5,300.
- Paul received free parking in the company's security garage that would normally cost $200 per month.
- Paul manages the safety program for ASCI. In recognition of his superior handling of three potential crises during the year, Paul was awarded the Employee Safety Award on December 15. The cash award was $600.
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