Scenario

John and Julia are married and have two children. John works as a graphic designer for a design firm and Julia is a massage therapist. They own a vacation home in Colorado that is used 30% for personal purposes (assume it is used 70% as a rental property and the income and expenses related to the rental have been accounted). During the year they receive $700 in reimbursements from their medical plan and report $5,500 of investment income (included in AGI). They contributed stock, with a fair market value of $3,150, which they acquired in 2005 at a cost of $1,800 to Ohlone College. Their gambling winnings for the year were $1,000 and are included in their adjusted gross income. Their adjusted gross income for the year is $101,000 and they provide you with the following data:

Automobile insurance 1,450/Homeowners insurance 625

Life insurance 1,200 / Disability insurance 475

Health insurance premiums (paid on an after tax basis) 1,650/Country club dues 1,600/

Gym membership 850/Hospital bills 5,100

Doctor bills 1,475/Aroma Therapy 700

Dentist bills 3,780/Prescription medications 295

Over-the-counter medications 470/State taxes withheld 8,350

Property taxes (ad valorem) 450/Investment interest 1,700

Mortgage interest (primary residence) 7,050/Real estate taxes (primary residence) 2,140

Mortgage interest (vacation residence - unallocated) 2,650/Real estate taxes (vacation residence - unallocated) 1,520

Charitable contributions (cash; they have receipts) 7,950/Charitable contribution (clothes at FMV)200

Subscriptions to investment journals 150/Dues to professional organizations 400

Tax prep fees 550/Investment advice 650

Parking at work 250/Safe-deposit box 700

Gambling losses 0

Unreimbursed employee business expenses (the full amounts paid and unreimbursed)

Airfare 500/Lodging 450

Meals 290/Entertainment 280

Incidentals 250

Questions to answer on D2L:

Enter the following amounts from the 2019 Schedule A.

Fill in the Blanks:

Remember to enter only whole numbers with no commas, periods, or symbols.

Line1,2,3,4,5a,5b,5c,5d,5e,6,7,8a,8b,8c,8e,9,10,11,12,14,15,16,17

Multiple Choice

Will they itemize or use the standard deduction?

Multiple choice options itemize, standard deduction

How many personal and dependency exemptions will they receive?

Multiple choice options 0, 1, 2, 3, 4, 5

By how much are their charitable contributions limited?

1. $0
2. $20,387
3. $30,300
4. $101,000

What would reduce their tax liability more?

1. An additional $500 state taxes paid.
2. An additional $200 mortgage interest paid.
3. a and b are both the same.

True or False

The box by 5a should be checked. T F

The box by 8a should be checked. T F

The box on line 18 should be checked. T F