Question
Required: Use the information below to complete the taxpayers taxable income and tax. Make assumptions regarding any information not given. Client Information: Taxpayer Name: John
Required: Use the information below to complete the taxpayers taxable income and tax. Make assumptions regarding any information not given.
Client Information:
Taxpayer Name: John Doe Spouse: Jane Doe
Taxpayer DOB: March 2, 1963 DOB: June 20, 1965
Occupation: Lawyer Occupation: Interior Designer
Dependents:
Michael Doe Emily Doe Bella Doe
April 18, 2000 May 21, 2002 June 24, 2018
Child Care Expenses
John and Jane paid Challenges Day Care a total of $3,500 to care for Bella Doe while they worked. Challenges gave them a receipt for the full amount and the receipt included their federal ID #.
Education Expenses
Michael started his first year at State University. Total expenses:
$11,500 Tuition
381 Fees
427 Books
4,400 Room and Board
Michael received a scholarship for $5,000, which was limited to pay his tuition. John and Jane paid the remainder of the tuition which was 6,500.
Earned Income
Jane works for Macro Interior Design and her W-2 is as follows:
Wages $67,877
Federal withholding $7,354
Social Security withholding $4,208
Medicare withholding $543
State (CA) withholding $4,947
Self-Employment Income
John received $147,647 from his clients. His expenses were as follows:
Advertising $1,750 | Utilities $1,834 | Court Fees $10,542 |
Accounting Fees 1,500 | Office Supplies 1,200 | Office Rent 4,400 |
Secretary Wages 32,000 | Liability Insurance 650 |
|
Travel 3,196 | Equipment Repairs 2,539 | Computer Repairs 1,425 |
Licenses and fees 660 | Client Gifts 2,500 for 100 people |
Rental Income
John and Jane purchased a rental property in January of 2016 to offset some of their income. The home was purchased for $200,000 and $25,000 was for the land. It was empty for part of the year, but a new tenant moved in February 1st of the current year. The rent is $2,250 per month. The renter paid a refundable $875 cleaning fee.
The following expenses were paid by the Does:
Advertising $ 75
Insurance 532
Utilities 150 (while house was empty)
Repairs 450
Property Taxes 2,769
Mortgage Interest 4,525
Other Deductions/Expenses/Payments
John and Jane give you the following information:
Federal quarterly taxes paid for 2018 $14,000
2017 State Balance Due $1,349 Paid April 10th, 2018
2018 State Quarterly payments for $4,800 Paid each quarter on time (1,200 per payment)
(4th Qtr 2017 payment was $1,000 paid in Jan 2018)
Property taxes 3,478
Mortgage Interest 10,432
Cash Donations to Church 15,000
Cash Donations to Goodwill 399
Car Loan Interest 500
BofA Credit Card Interest 1,200
John and Jane will file MFJ for 2018 and will utilize any available deductions/credits.
Compute the following:
Total includable gross income:
Deductions for AGI:
AGI:
Itemized Deductions:
Which should they choose (itemized or standard):
Taxable income:
Tax:
Credits:
Tax Due/Refund:
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