Question
Tax Question Josephine, a single individual received the following income in 2016: 1. salary of $100,000 2. she was in a car accident and received
Tax Question
Josephine, a single individual received the following income in 2016:
1. salary of $100,000
2. she was in a car accident and received compensatory damages for her broken nose in the amount of 25,000
3. check for $15,000 as a gift from her favorite aunt, Barbara
4. interest income from Township of Clifton bonds in the amount of $1,000
5. refund of 2015 NJ Income Taxes of $2,000 (Josephine itemized her deductions in 2015; her itemized deductions exceeded the standard deduction by $5,000)
Josephine also incurred and paid the following expenses during the year: | ||
6. | Medical expenses $ 5,000 | |
7. | Parking tickets | 200 |
8. | Alimony | 24,000 |
9. | Legal fees associated with divorce proceedings-not tax related | 4,000 |
10. | Charitable contributions - paid on 12/30/16 with a credit card | 2,000 |
Il. | Casualty loss (after $100 floor, but before any further limitations) | 1,000 |
12. | Mortgage payment on principal residence: principal only | 10,000 |
13. | Mortgage payment on principal residence: interest expense | 4,500 |
14. | Property taxes (real estate taxes) on personal residence | 4,200 |
15. | Nephew, Aaron, owns a home and could not make his property tax payment as he is unemployed. Josephine paid Gerardo's property taxes (real estate taxes). | 3,000 |
16. | Federal income tax withheld | 8,000 |
17. | Moving expenses | 2,500 |
18. | Contribution to a traditional IRA | 4,000 |
19. | Cost of new roof on personal residence | 14,000 |
20. | NJ income tax withheld | 1,300 |
Identify items 1 through 20 as follows: income = taxable or not taxable, OR expense = a deduction for AGI, a deduction from AGI or not deductible. *An item can NOT be classified as both income AND an expense.
NOTE: Certain items above require special attention. Provide a sentence or two explaining limitations, rules, etc. for the following items: 5, 6, 10, 11, 15, 19. Please put the sentence next to your response in Part A.
NOTE: When preparing your answer, you do not need to re-type every item and dollar amount. You can simply number your responses 1-20 and provide your answer.
Using the tax formula, beginning with Income Broadly Conceived, provide a detailed calculation of Josephine's 2016 taxable income. Your answer MUST follow the tax formula! I am also looking for your calculation to compare the standard deduction amount to the total itemized deductions. Please in detail.
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