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Assignment 4: Individual Income Tax Overview (Female) QUESTION 1 John and Tara Smith are married couples and have been married for 20 years. They have three sons, Andrew (10-year-old) and Mason (14-year-old) who lived together with them in Texas. However, their eldest son, Andy (18-year-old) living close to his university campus. For the year 2018, the Smith elect married filing jointly in filing tax returns. 1. The following are the sources of income received for the year 2018: a. John works as an engineer and received an annual salary of $92,000 and a year-end bonus of $10,000. Tara is a high-school teacher, received an annual salary of $58,000. b. The Smith received $20,000 in the current year from an annuity they purchased last five years. They purchased an annuity that to be paid annually for 15 years, for $180,000. C. The Smith also received rental income of $12,000 for the year. However, they have paid $1,000 agent's commission and $800 real estate taxes. d. The Smith also received an interest income of $1,800 from Austin City bonds that they purchased a few years ago. 2. The Smith also earned income from the disposition of capital assets (stocks) as follows: Short-term capital gain: $12,000 Short-term capital loss: ($8,000) Long-term capital gain: $10,000 Long-term capital loss: ($4,000) 3. John and Tara have made contributions to qualified retirement accounts amounting to $12,000 and $5,000 respectively for the year 2018. 4. The total itemized deductions claimed by the Smith in the current year is $28,000. 5. In the current year, the Smith paid a neighbor of $3,200 to care for their 11-year-old son, Andrew. 6. They also paid $2,500 of tuition fees and $500 for books for Andy to attend the University of Texas during the Fall semester of his second-year study. 7. During the year, John's employer withheld $5,800 of federal income taxes from John's paychecks in 2018. 8. In addition, Tara's employer withheld $3,200 of federal income taxes from Tara's paychecks in 2018. REQUIRED: Compute the amount of tax refund or taxes due for John and Tara for the year 2018 as they elect for married filing jointly. Income Taxes Rate Table for 2018 ta T $ $100 $12600 SSS $ 955 O become 59535 S 300595250 plus of the Over $9525 S 700 S 500 5445250plusse 51 551 800 $ 500 55 2 2 $ 500 $157500312 $ 2500 $157.500 $14089 50 plus 20% of the ce 500 $157500 5200 000 $32089 50 plus 32% of the excess Der $157500 5200.000 5500 000 545.689 50 plus 35% of the excess 200 000 $150 689 50 plus 37of the excess 100 000 $157.500 5.200.000 $20.99 GO $200 000 $500.000 298 of 200 000 $500,000 - $100 500 000 Schedule Y 1 Married Filing Jointly or Qualitying Widower) Schedule Y-2 Married Filing Separately tamatie home is But But not The taxis 0 $19.050 10% of taxable income $19.050 S 77000S1.5 plus 12% of the excess Over $19050 $77.400 $165.000 $8.907 plus 22% of the excess $165,000 $315.000 $28,179 plus 20% of the excess Over $165.000 $315,000 $400.000 $64,170 plus 321 of the excess Over $315.000 $400,000 $600.000 591,379 plus 35% of the excess Over $400.000 $600,000 - $161,379 plus 37% of the excess Over $600.000 O$9525 10% of table income $9.525 S 38.700 $952.50 plus 12% of the ce 59525 $ 78.700 $ 82.500 $4,453 50 plus 22% of the exces 700 $ 82.500 $157.500 $14.089.50 plus 20% of the 8500 $157.500 $200,000 $32,089 50 plus of the exc o $1575.00 $200 000 $300 000 $45 689 50 51 of the exces Over $200000 $200000 - $80 680 5 of the exces OVO $200.000 Trusts Married Filing Jointly Tax Rates for Net Capital Gains and Qualified Dividends Taxable income Married Head of Feng Separately Household $0-$38.500 $0-$38.600 $0-$51.700 $38.601 - 5239.500 38.601-5425.300 $51.701 - $452.400 $299 500 $425.01 $452.001 0% 15% 20% $0-$77,200 77.201-$479,000 $499.000 $2.601-$12.700 $12701 This is to the od dividends we e colon and used dividends that fall within the range of t income for this ble incom e in the e n d Basic Standard Deduction Amounts 2018 Amount Filing Status Married ang Joint Qualifying Widow or Widower Married in Separately Head of Household Sole 2017 Amount $12,700 512700 56.350 $9150 $6.350 $24.000 $24,000 $12.000 S18000 $12.000 For individuals demed as a dependent on anotherum the 2018 dard deduction is the greater 51.050 50 cmedin.com not t o the standard deduction amount of those who are not EXHIBIT 4-5 Partial Listing of common for AGI Deductions For AGI Deduction Alimony paid (pre-2019 decree) Health insurance deduction for self-employed taxpayers Rental and royalty expenses Capital losses (net losses limited to $3,000 for the year) One-half of self-employment taxes paid Discussed in More Detail in These Chapters Individual Deductions Individual Deductions Individual Deductions and Tax Consequences of Home Ownership Investments Individual Income Tax Computation and Tax Credits Business Income, Deductions, and Accounting Methods Property Dispositions Retirement Savings and Deferred Compensation Business expenses Losses on dispositions of assets used in a trade or business Contributions to qualified retirement accounts (eg, 401Ks and individual retirement accounts (RAS)] EXHIBIT 8-9 If AGI is over Child and Dependent Care Credit Percentage then the but not over percentage is 35% $ 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 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 Assignment 4: Individual Income Tax Overview (Female) QUESTION 1 John and Tara Smith are married couples and have been married for 20 years. They have three sons, Andrew (10-year-old) and Mason (14-year-old) who lived together with them in Texas. However, their eldest son, Andy (18-year-old) living close to his university campus. For the year 2018, the Smith elect married filing jointly in filing tax returns. 1. The following are the sources of income received for the year 2018: a. John works as an engineer and received an annual salary of $92,000 and a year-end bonus of $10,000. Tara is a high-school teacher, received an annual salary of $58,000. b. The Smith received $20,000 in the current year from an annuity they purchased last five years. They purchased an annuity that to be paid annually for 15 years, for $180,000. C. The Smith also received rental income of $12,000 for the year. However, they have paid $1,000 agent's commission and $800 real estate taxes. d. The Smith also received an interest income of $1,800 from Austin City bonds that they purchased a few years ago. 2. The Smith also earned income from the disposition of capital assets (stocks) as follows: Short-term capital gain: $12,000 Short-term capital loss: ($8,000) Long-term capital gain: $10,000 Long-term capital loss: ($4,000) 3. John and Tara have made contributions to qualified retirement accounts amounting to $12,000 and $5,000 respectively for the year 2018. 4. The total itemized deductions claimed by the Smith in the current year is $28,000. 5. In the current year, the Smith paid a neighbor of $3,200 to care for their 11-year-old son, Andrew. 6. They also paid $2,500 of tuition fees and $500 for books for Andy to attend the University of Texas during the Fall semester of his second-year study. 7. During the year, John's employer withheld $5,800 of federal income taxes from John's paychecks in 2018. 8. In addition, Tara's employer withheld $3,200 of federal income taxes from Tara's paychecks in 2018. REQUIRED: Compute the amount of tax refund or taxes due for John and Tara for the year 2018 as they elect for married filing jointly. Income Taxes Rate Table for 2018 ta T $ $100 $12600 SSS $ 955 O become 59535 S 300595250 plus of the Over $9525 S 700 S 500 5445250plusse 51 551 800 $ 500 55 2 2 $ 500 $157500312 $ 2500 $157.500 $14089 50 plus 20% of the ce 500 $157500 5200 000 $32089 50 plus 32% of the excess Der $157500 5200.000 5500 000 545.689 50 plus 35% of the excess 200 000 $150 689 50 plus 37of the excess 100 000 $157.500 5.200.000 $20.99 GO $200 000 $500.000 298 of 200 000 $500,000 - $100 500 000 Schedule Y 1 Married Filing Jointly or Qualitying Widower) Schedule Y-2 Married Filing Separately tamatie home is But But not The taxis 0 $19.050 10% of taxable income $19.050 S 77000S1.5 plus 12% of the excess Over $19050 $77.400 $165.000 $8.907 plus 22% of the excess $165,000 $315.000 $28,179 plus 20% of the excess Over $165.000 $315,000 $400.000 $64,170 plus 321 of the excess Over $315.000 $400,000 $600.000 591,379 plus 35% of the excess Over $400.000 $600,000 - $161,379 plus 37% of the excess Over $600.000 O$9525 10% of table income $9.525 S 38.700 $952.50 plus 12% of the ce 59525 $ 78.700 $ 82.500 $4,453 50 plus 22% of the exces 700 $ 82.500 $157.500 $14.089.50 plus 20% of the 8500 $157.500 $200,000 $32,089 50 plus of the exc o $1575.00 $200 000 $300 000 $45 689 50 51 of the exces Over $200000 $200000 - $80 680 5 of the exces OVO $200.000 Trusts Married Filing Jointly Tax Rates for Net Capital Gains and Qualified Dividends Taxable income Married Head of Feng Separately Household $0-$38.500 $0-$38.600 $0-$51.700 $38.601 - 5239.500 38.601-5425.300 $51.701 - $452.400 $299 500 $425.01 $452.001 0% 15% 20% $0-$77,200 77.201-$479,000 $499.000 $2.601-$12.700 $12701 This is to the od dividends we e colon and used dividends that fall within the range of t income for this ble incom e in the e n d Basic Standard Deduction Amounts 2018 Amount Filing Status Married ang Joint Qualifying Widow or Widower Married in Separately Head of Household Sole 2017 Amount $12,700 512700 56.350 $9150 $6.350 $24.000 $24,000 $12.000 S18000 $12.000 For individuals demed as a dependent on anotherum the 2018 dard deduction is the greater 51.050 50 cmedin.com not t o the standard deduction amount of those who are not EXHIBIT 4-5 Partial Listing of common for AGI Deductions For AGI Deduction Alimony paid (pre-2019 decree) Health insurance deduction for self-employed taxpayers Rental and royalty expenses Capital losses (net losses limited to $3,000 for the year) One-half of self-employment taxes paid Discussed in More Detail in These Chapters Individual Deductions Individual Deductions Individual Deductions and Tax Consequences of Home Ownership Investments Individual Income Tax Computation and Tax Credits Business Income, Deductions, and Accounting Methods Property Dispositions Retirement Savings and Deferred Compensation Business expenses Losses on dispositions of assets used in a trade or business Contributions to qualified retirement accounts (eg, 401Ks and individual retirement accounts (RAS)] EXHIBIT 8-9 If AGI is over Child and Dependent Care Credit Percentage then the but not over percentage is 35% $ 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 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