Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rebecca and Thomas are married and file jointly for the 2020 tax year. They are both advertising consultants for the same company. They earned $85,000

Rebecca and Thomas are married and file jointly for the 2020 tax year. They are both advertising consultants for the same company. They earned $85,000 in salaries in total and the company forgave a $20,000 loan they made to the couple earlier in the tax year. They were solvent at the time the loan was forgiven. Their firms withheld $20,000 of tax from their salaries this year in total. In addition to the above, the following occurred during the year:

  • They paid $15,000 in mortgage interest and $3,000 in real estate taxes for their primary residence.
  • They sold their SUV for $1,500 less than its adjusted tax basis. They had owned it for 7 years. They are not high income taxpayers.
  1. Determine Rebecca and Thomas AGI. (6 points)

  1. Ignore your answer in a). Assume that Rebecca and Thomas AGI for the year is $78,650. Determine the amount of itemized deduction that Rebecca and Thomas have available this year. (7 points)

  1. Ignore your answer in b). Assume that the amount of itemized deduction available is $21,630. Using the 2020 standard deduction amounts (assuming no additional amounts for age or blindness) from Appendix D in your book, first determine whether Rebecca and Thomas itemize or take the standard deduction. If you determine they itemize, write in the itemized deduction dollar amount given ($21,630). Alternatively, if you determine they will take the standard deduction, write in the standard deduction amount for which they qualify (tied to the appropriate filing status). (6 points)

  1. Ignore your answer in a) - c). Assume that Rebecca and Thomas taxable income is $147,900 and his employer withheld $20,000 in tax from his wages. Using the tax rate schedule from Appendix D in your book, determine the amount of taxes due or the amount of refund. Remember to clearly mark the answer as either the amount of tax due or a refund due (e.g. refunds are negative amounts as represented with parentheses or a negative sign). Assume AMT does not apply, and there are no tax credits available. (6 points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing For Managers The Ultimate Risk Management Tool

Authors: K. H. Spencer Pickett, Jennifer M. Pickett

1st Edition

0470090987, 978-0470090985

More Books

Students also viewed these Accounting questions

Question

Describe the seven standard parts of a letter.

Answered: 1 week ago

Question

Explain how to develop effective Internet-based messages.

Answered: 1 week ago

Question

Identify the advantages and disadvantages of written messages.

Answered: 1 week ago