The first page is the 2 questions with facts. Use the Tax Returns below to reference on how to answer the question and use Excel on how to do calculations for the returns in 2018?

Use these Tax Return as reference to answer the above question

FACTS Bret and Samantha Woodley have been our clients for many years. They have one child who is 19 years old and will be in his third year of college in 2018. Bret is concerned about the new tax laws signed by Donald Trump in December of 2017 and has a couple of questions for us to research. Assuming the income, deductions and Federal Income Tax withholding are exactly the same as what we used on his 2017 Federal Form 1040; ISSUE 1. What will be their incomes taxes due or refunded in 2018? 2. How long are these new tax rules going to be around? CONCLUSION: 1. Answer: 2. Answer: BASIS FOR CONCLUSION: Amount from line 37 (adjusted gross income) 39a Check 38 Tax and Credits You were born before January 2, 1953, Spouse was born before January 2,1963, Blind. J checked39a If your spouse iternizes on a separate returm or you were a duai stalus alen, check here9b Itemized deductions (from Schedule A) or your standard deduction (see left margin)-...... 34,035.00 1 Subtract ine 40 from line 38. People who 42 Exemptions. if ine 38 is $156,800 or less, multiply $4,050 by the number on ine Cwise see linstructons 43 Taxable income. Subtract line 42 from line 41. If ine 42 is more than line 41, enter 63,815.00 344 Tax (see instructions), Check E any rom laimed as Alternative minimum tax (see instructions), Allach Form 6251 4 Excess advance premium tax credit repayment. Atach Form 8952.............. 47 Add lines 44, 45, and 46.. . 48 Foreign tax credit. Attach Form 1116 if required Married filing 4 Cresit for child and dependent care expenses. Aach Form 2441..49 credits from Form 8863, line 19..........0 Married fing | 51 Retirement savings contributions credit. Attach Form 8880 1 52 Child tax credit. Attach Schedule 8812, required .....2 Education ,500.00 53 Residential energy credits 54 Other credits from Form 00 b8801 c 55 Add lines 48 through S4. These are your total credits. 7 Self-employment tax Attach Schedule SE Other Taxes Unreported social security and Medicare tax from Formm a4137 b8919-....8 59 Additional tax on IRAs, other qualfied retirement plans, etc Attach Form 5329 if requied L9 60a Household employment taxes from ScheduleH b First-time homebuyer credit repayment. Altach Form 5405 requaired 61 Health care individual 2 Taxes from Ful year coverage Form 8959brom 8900 instructions eodes) Payments 4 Federal income tax witnheld from Forms W-2 and 1099. Iyou have 66a Earned income credit (EIc) Schedule EIC 67 Additional child tax credit. Attach Schedule 8812 65 2017 estimated tax payments and amount applied from 2016 return b Nontaxable combat pay election..66b 68 American opportunity credit from Form 8863, Iine 8........ 70 Amount paid with request for extension to file 71 Excess social security and tier 1 RRTA tax withheld.... Credits from Fom: 74 Add lines 64 73 9,000.00 859.00 Refund 75 ine 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaild. Direct deposi? b Routing number instructions d Account number Amount 78 Amount you owe. Subtract ine 74 from ine 63. For details on how to pay, see Iinstructions.78 76a Amount of ine 7 check here 77 Amount of line 75 you want Third Party Do you want to alow another person to discuss this return with the IRS (see instructions)? Yes. Complete below Keep a oopy or Fin's address 2017) OMS No. 1545-0074 SCHEDULE A (Form 1040) Department of the Namo(s) shown on Form 1040 Itemized Deductions Go to www.irs gowsScheduleA for instructions and te latest information Attach to Form 1040. 2017 oss on Fom 4684, ee the instructions tor line 28 Your social security number ley and Samantha Medical and Dental Caution: Do not include expenses relimbursed or paid by others Medical and dental expenses (see instructions).... Enter amount from Form 1040, Ine 38 Multiply line 2 by 7.5% (0.075) 1 2 3 Taxes You State and local (check only one box): a X Income taxes, or General sales taxes Other taxes. List type and amount 1,535.00 Interest 0 Heme mortgage interest and points reported to you on Form 1098 You Paid 11 Mome mortgage interest not reported to you on Form 1019. If paid to the person from whom you bought the home, see instructions and show that peon's name, identifying no, and address Note: nteres be limited (s0e 12 Points not reported to you on Form 109. See instructions for special rules 12 13 Martgage insurance premiums (see instructions). .13 4 Investment interest. Attach Form 4952 required. See insructions 1 Gifts to1 Charity s by cash or check. I you made any gift of $250 or 500.00 17 Other than by cash or check. If any gift of $250 or more, If you made a gift and got a benaft for 18 Carryover from prior year see instractons 19 Add see instructions. You must attach Form 8283 over $500, 17 Casualty and 20 Theft Losses Casualty or theft loss(es) other than net qualified disaster losses. Atach Form 4684 and the amount trom line 18 of that form. See Job Expenses 21 Unreimbursed employee expenses-job travel, unlion dues, and Certain Miscellaneous Deductions 22Tax preparation fees job education, ete. Atach Form 2106 of 2108-EZif required See istructions. 23 Other expenses-investment, safe deposi box, etc. List type and amountP 24 25 Add lines 21 through 23 Enter amount from Fom 1040, line Multiply line 25 by 2% (0.02) 25 26 Other 28 other-from list in instructions. List type and amount 28 Total Itemized 29 s Form 1040, line 38, over $156,800? X No. Your deduction is not limited. Add the amounts in the far right colunn for lines 4 through 28. Also, enter this amount on Form 1040, line 40 Yes. Your deduction may be limited. See the temized Deductions Worksheet in the iInstructions to figure the amount to enter 30 If you elect to itemize deductions even though they are less than your deduction, check here For Paperwork Reduction Act Notice, see the Instructions for Form 1040 1400 3000 Schedule A (Form 1040) 2017 8863 OMB No. 1545-0074 Education Credits (American Opportunity and Lifetime Learning Credits) Attach to Form 1040 or Form 1040A Go to www.irs.goForm8863 for instructions and the latest information. 2017 Department of the Treasury Sequence No.50 Your social security number Bret Woodley and Samantha Woodle 123-45-6789 !Complete a separate Part IlI on page 2 for each student for whom you're claiming either credit before you complete Parts Iand Il CAUTION Credit Part I 1 After completing Part IlIl for each student, enter the total of all amounts from all Parts IlI, line 30.... . ...1 2 Enter: $180,000 if married filling jointly; $90,000 if single, head of Refundable American 2, 500.00 0.00 3 Enter the amount from Form 1040, line 38, or Form 1040A line 22. If you're filing Form 2555, 2555-EZ, or 4563, or you're excluding income from Puerto Rico, see Pub. 970 for the amount to enter..... Subtract line 3 from line 2. If zero or less, stop; you can't take any education credit Enter: $20,000 if married filing jointly, $10,000 if single, head of household, 110,000.00 4 5 20,000.00 6 If ine 4 is: e Equal to or more than line 5, enter 1.000 on line 6 Less than line 5, divide line 4 by line 5. Enter the result as a decimal (rounded to at least three places) Multiply line 1 by line 6. Caution: If you were under age 24 at the end of the year and meet the conditions described in the instructions, you can't take the refundable American opportunity credit; skip line 8, enter the amount from line 7 on line 9, and check this box............> 2,500.00 1,000.00 500.00 0.00 8 Refundable American opportunity credit. Multiply line 7 by 40% (0.40). Enter the amount here and on Form 1040, line 68, or Form 1040A, line 44. Then ine 9 below Nonrefundable Education Credits Part Il 9 Subtract line 8 from line 7. Enter here and on line 2 of the Credit Limit Worksheet (see instructions) . .....9 10 After completing Part IlI for each student, enter the total of all amounts from all Parts , line 31. If Enter the smaller of line 10 or $10,000. 13 Enter: $132,000 if married filing jointly, $66,000 if single, head of 13 14 Enter the amount from Form 1040, line 38, or Form 1040A, line 22. If you're filing Form 2555, 2555-EZ, or 4563, or you're excluding income from 15 Subtract line 14 from line 13. If zero or less, skip lines 16 and 17, enter-o 16 Enter: $20,000 if married filing jointly; $10,000 if single, head of household, on line 18, and go to line 19 15 17 If line 15 is: e Equal to or more than line 16, enter 1.000 on line 17 and go to line 18 * Less than line 16, divide line 15 by line 16. Enter the result as a decimal (rounded to at least three 18 19 Multiply line 12 by line 17. Enter here and on line 1 of the Credit Limit Worksheet (see instructions) Nonrefundable education credits. Enter the amount from line 7 of the Credit Limit Worksheet (see 1,500.00 Form 8863 (2017) here and on Form 1040, line Form 1040A, line 3 For Paperwork Reduction Act Notice, see your tax return instructions. Name(s) shown on return Your soeial security number Bret Woodley and Samantha Woodley 123-45-6789 Complete Part II for each student for whom you're claiming either the American opportunity credit or lifetime learning credit Use additional copies of page 2 as needed for each student. CAUTION Student and Educational Institution Information. See instructions. Part lIll 20 Student name (as shown on page 1 of your tax return) 21 Student social security number (as shown on page 1 of your tax return) John Woodle 22 888-88-8888 Educational institution information (see Instructions a. Name of first educational institution CSUF (1) Address.Number and street (or P.O.boxp.City,town or b. Name of second educational institution f any) (1) Address. Number and street (or P.O. bax City, town or post office, state, and ZIP code. If a foreign address, see instructions post office, state, and ZIP code. If a foreign address, see instructions State College llrton Ca Did the student from this institution for 2017? No (2) Did the student receive Form 1098-T from this institution for 2017? (3) Did the student receive Form 1096-T from this institution for 2016with box 2 filled in and box 7 checked? (3) Did the student receive Form 1098-T Yes l - from this Iinstitution for 2016 with box 2 filled in and box 7 checked? Yes No No (4) Enter the institution's employer identification number (EN 4) Enter the institution's employer identification number if you're claiming the American opportunity credit or if you checked Yes" in (2) or (3). You can get the EIN from Form 1098-T or from the institution. (EIN iIf youre claiming the American opportunity credit or ifyou checked "Yes" in (2) or You can get the EN from Form 1098-T or from the institution 23 Has the Hope Scholarship Credit or American opportunityYes-Stopl credt been claimed for this student for any 4 tax years XNo-Go to line 24. Go to line 31 for this student. before 2017 Was the student enrolled at least hals-time for at least one academic period that began or is treated as having begun in XYes-Go to line 25. 2017 at an eligible educational institution in a progranm leading towards a postsecondary degree, certificate, or other recognized postsecondary educational credential? 24 No- Stopl Go to line 31 for this student 26 Did the student complete the first 4 years of postsecondaryYestopt XNo-Go to line 26. education before 20177 See instructions Go to line 31 for this student 26 Was the student convicted, before the end of 2017, of a felony for possession or distribution of a controlled XNo-Complete lines 27 Go to line 31 for this student through 30 for this student !You cant take the American opportunity credit and the Medime learning credit for the same student in the same year. CAUTION you complete lines 27 through 30 for this student, don't complete line 31 American Opportunity Credit 27 Adjusted qualified education expenses (see instructions). Don't enter more than $4,000........- 4,000.00 000.00 28 Subtract $2,000 from line 27. If zero or less, enter-0-. .-...----.. ---.- -.-.-. 29 Multiply line 28 by 25%(025) 30 If line 28 is zero, enter the amount from line 27. Otherwise, add $2,000 to the amount on line 29 and 2,500.00 enter the result Skip line 31 Include the total of all amounts from all Parts Il line 30 on Part L line 1 Lifetime Learning Credit 31 Adjusted qualified education expenses (see instructions). Include the total of all amounts from all Parts FACTS Bret and Samantha Woodley have been our clients for many years. They have one child who is 19 years old and will be in his third year of college in 2018. Bret is concerned about the new tax laws signed by Donald Trump in December of 2017 and has a couple of questions for us to research. Assuming the income, deductions and Federal Income Tax withholding are exactly the same as what we used on his 2017 Federal Form 1040; ISSUE 1. What will be their incomes taxes due or refunded in 2018? 2. How long are these new tax rules going to be around? CONCLUSION: 1. Answer: 2. Answer: BASIS FOR CONCLUSION: Amount from line 37 (adjusted gross income) 39a Check 38 Tax and Credits You were born before January 2, 1953, Spouse was born before January 2,1963, Blind. J checked39a If your spouse iternizes on a separate returm or you were a duai stalus alen, check here9b Itemized deductions (from Schedule A) or your standard deduction (see left margin)-...... 34,035.00 1 Subtract ine 40 from line 38. People who 42 Exemptions. if ine 38 is $156,800 or less, multiply $4,050 by the number on ine Cwise see linstructons 43 Taxable income. Subtract line 42 from line 41. If ine 42 is more than line 41, enter 63,815.00 344 Tax (see instructions), Check E any rom laimed as Alternative minimum tax (see instructions), Allach Form 6251 4 Excess advance premium tax credit repayment. Atach Form 8952.............. 47 Add lines 44, 45, and 46.. . 48 Foreign tax credit. Attach Form 1116 if required Married filing 4 Cresit for child and dependent care expenses. Aach Form 2441..49 credits from Form 8863, line 19..........0 Married fing | 51 Retirement savings contributions credit. Attach Form 8880 1 52 Child tax credit. Attach Schedule 8812, required .....2 Education ,500.00 53 Residential energy credits 54 Other credits from Form 00 b8801 c 55 Add lines 48 through S4. These are your total credits. 7 Self-employment tax Attach Schedule SE Other Taxes Unreported social security and Medicare tax from Formm a4137 b8919-....8 59 Additional tax on IRAs, other qualfied retirement plans, etc Attach Form 5329 if requied L9 60a Household employment taxes from ScheduleH b First-time homebuyer credit repayment. Altach Form 5405 requaired 61 Health care individual 2 Taxes from Ful year coverage Form 8959brom 8900 instructions eodes) Payments 4 Federal income tax witnheld from Forms W-2 and 1099. Iyou have 66a Earned income credit (EIc) Schedule EIC 67 Additional child tax credit. Attach Schedule 8812 65 2017 estimated tax payments and amount applied from 2016 return b Nontaxable combat pay election..66b 68 American opportunity credit from Form 8863, Iine 8........ 70 Amount paid with request for extension to file 71 Excess social security and tier 1 RRTA tax withheld.... Credits from Fom: 74 Add lines 64 73 9,000.00 859.00 Refund 75 ine 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaild. Direct deposi? b Routing number instructions d Account number Amount 78 Amount you owe. Subtract ine 74 from ine 63. For details on how to pay, see Iinstructions.78 76a Amount of ine 7 check here 77 Amount of line 75 you want Third Party Do you want to alow another person to discuss this return with the IRS (see instructions)? Yes. Complete below Keep a oopy or Fin's address 2017) OMS No. 1545-0074 SCHEDULE A (Form 1040) Department of the Namo(s) shown on Form 1040 Itemized Deductions Go to www.irs gowsScheduleA for instructions and te latest information Attach to Form 1040. 2017 oss on Fom 4684, ee the instructions tor line 28 Your social security number ley and Samantha Medical and Dental Caution: Do not include expenses relimbursed or paid by others Medical and dental expenses (see instructions).... Enter amount from Form 1040, Ine 38 Multiply line 2 by 7.5% (0.075) 1 2 3 Taxes You State and local (check only one box): a X Income taxes, or General sales taxes Other taxes. List type and amount 1,535.00 Interest 0 Heme mortgage interest and points reported to you on Form 1098 You Paid 11 Mome mortgage interest not reported to you on Form 1019. If paid to the person from whom you bought the home, see instructions and show that peon's name, identifying no, and address Note: nteres be limited (s0e 12 Points not reported to you on Form 109. See instructions for special rules 12 13 Martgage insurance premiums (see instructions). .13 4 Investment interest. Attach Form 4952 required. See insructions 1 Gifts to1 Charity s by cash or check. I you made any gift of $250 or 500.00 17 Other than by cash or check. If any gift of $250 or more, If you made a gift and got a benaft for 18 Carryover from prior year see instractons 19 Add see instructions. You must attach Form 8283 over $500, 17 Casualty and 20 Theft Losses Casualty or theft loss(es) other than net qualified disaster losses. Atach Form 4684 and the amount trom line 18 of that form. See Job Expenses 21 Unreimbursed employee expenses-job travel, unlion dues, and Certain Miscellaneous Deductions 22Tax preparation fees job education, ete. Atach Form 2106 of 2108-EZif required See istructions. 23 Other expenses-investment, safe deposi box, etc. List type and amountP 24 25 Add lines 21 through 23 Enter amount from Fom 1040, line Multiply line 25 by 2% (0.02) 25 26 Other 28 other-from list in instructions. List type and amount 28 Total Itemized 29 s Form 1040, line 38, over $156,800? X No. Your deduction is not limited. Add the amounts in the far right colunn for lines 4 through 28. Also, enter this amount on Form 1040, line 40 Yes. Your deduction may be limited. See the temized Deductions Worksheet in the iInstructions to figure the amount to enter 30 If you elect to itemize deductions even though they are less than your deduction, check here For Paperwork Reduction Act Notice, see the Instructions for Form 1040 1400 3000 Schedule A (Form 1040) 2017 8863 OMB No. 1545-0074 Education Credits (American Opportunity and Lifetime Learning Credits) Attach to Form 1040 or Form 1040A Go to www.irs.goForm8863 for instructions and the latest information. 2017 Department of the Treasury Sequence No.50 Your social security number Bret Woodley and Samantha Woodle 123-45-6789 !Complete a separate Part IlI on page 2 for each student for whom you're claiming either credit before you complete Parts Iand Il CAUTION Credit Part I 1 After completing Part IlIl for each student, enter the total of all amounts from all Parts IlI, line 30.... . ...1 2 Enter: $180,000 if married filling jointly; $90,000 if single, head of Refundable American 2, 500.00 0.00 3 Enter the amount from Form 1040, line 38, or Form 1040A line 22. If you're filing Form 2555, 2555-EZ, or 4563, or you're excluding income from Puerto Rico, see Pub. 970 for the amount to enter..... Subtract line 3 from line 2. If zero or less, stop; you can't take any education credit Enter: $20,000 if married filing jointly, $10,000 if single, head of household, 110,000.00 4 5 20,000.00 6 If ine 4 is: e Equal to or more than line 5, enter 1.000 on line 6 Less than line 5, divide line 4 by line 5. Enter the result as a decimal (rounded to at least three places) Multiply line 1 by line 6. Caution: If you were under age 24 at the end of the year and meet the conditions described in the instructions, you can't take the refundable American opportunity credit; skip line 8, enter the amount from line 7 on line 9, and check this box............> 2,500.00 1,000.00 500.00 0.00 8 Refundable American opportunity credit. Multiply line 7 by 40% (0.40). Enter the amount here and on Form 1040, line 68, or Form 1040A, line 44. Then ine 9 below Nonrefundable Education Credits Part Il 9 Subtract line 8 from line 7. Enter here and on line 2 of the Credit Limit Worksheet (see instructions) . .....9 10 After completing Part IlI for each student, enter the total of all amounts from all Parts , line 31. If Enter the smaller of line 10 or $10,000. 13 Enter: $132,000 if married filing jointly, $66,000 if single, head of 13 14 Enter the amount from Form 1040, line 38, or Form 1040A, line 22. If you're filing Form 2555, 2555-EZ, or 4563, or you're excluding income from 15 Subtract line 14 from line 13. If zero or less, skip lines 16 and 17, enter-o 16 Enter: $20,000 if married filing jointly; $10,000 if single, head of household, on line 18, and go to line 19 15 17 If line 15 is: e Equal to or more than line 16, enter 1.000 on line 17 and go to line 18 * Less than line 16, divide line 15 by line 16. Enter the result as a decimal (rounded to at least three 18 19 Multiply line 12 by line 17. Enter here and on line 1 of the Credit Limit Worksheet (see instructions) Nonrefundable education credits. Enter the amount from line 7 of the Credit Limit Worksheet (see 1,500.00 Form 8863 (2017) here and on Form 1040, line Form 1040A, line 3 For Paperwork Reduction Act Notice, see your tax return instructions. Name(s) shown on return Your soeial security number Bret Woodley and Samantha Woodley 123-45-6789 Complete Part II for each student for whom you're claiming either the American opportunity credit or lifetime learning credit Use additional copies of page 2 as needed for each student. CAUTION Student and Educational Institution Information. See instructions. Part lIll 20 Student name (as shown on page 1 of your tax return) 21 Student social security number (as shown on page 1 of your tax return) John Woodle 22 888-88-8888 Educational institution information (see Instructions a. Name of first educational institution CSUF (1) Address.Number and street (or P.O.boxp.City,town or b. Name of second educational institution f any) (1) Address. Number and street (or P.O. bax City, town or post office, state, and ZIP code. If a foreign address, see instructions post office, state, and ZIP code. If a foreign address, see instructions State College llrton Ca Did the student from this institution for 2017? No (2) Did the student receive Form 1098-T from this institution for 2017? (3) Did the student receive Form 1096-T from this institution for 2016with box 2 filled in and box 7 checked? (3) Did the student receive Form 1098-T Yes l - from this Iinstitution for 2016 with box 2 filled in and box 7 checked? Yes No No (4) Enter the institution's employer identification number (EN 4) Enter the institution's employer identification number if you're claiming the American opportunity credit or if you checked Yes" in (2) or (3). You can get the EIN from Form 1098-T or from the institution. (EIN iIf youre claiming the American opportunity credit or ifyou checked "Yes" in (2) or You can get the EN from Form 1098-T or from the institution 23 Has the Hope Scholarship Credit or American opportunityYes-Stopl credt been claimed for this student for any 4 tax years XNo-Go to line 24. Go to line 31 for this student. before 2017 Was the student enrolled at least hals-time for at least one academic period that began or is treated as having begun in XYes-Go to line 25. 2017 at an eligible educational institution in a progranm leading towards a postsecondary degree, certificate, or other recognized postsecondary educational credential? 24 No- Stopl Go to line 31 for this student 26 Did the student complete the first 4 years of postsecondaryYestopt XNo-Go to line 26. education before 20177 See instructions Go to line 31 for this student 26 Was the student convicted, before the end of 2017, of a felony for possession or distribution of a controlled XNo-Complete lines 27 Go to line 31 for this student through 30 for this student !You cant take the American opportunity credit and the Medime learning credit for the same student in the same year. CAUTION you complete lines 27 through 30 for this student, don't complete line 31 American Opportunity Credit 27 Adjusted qualified education expenses (see instructions). Don't enter more than $4,000........- 4,000.00 000.00 28 Subtract $2,000 from line 27. If zero or less, enter-0-. .-...----.. ---.- -.-.-. 29 Multiply line 28 by 25%(025) 30 If line 28 is zero, enter the amount from line 27. Otherwise, add $2,000 to the amount on line 29 and 2,500.00 enter the result Skip line 31 Include the total of all amounts from all Parts Il line 30 on Part L line 1 Lifetime Learning Credit 31 Adjusted qualified education expenses (see instructions). Include the total of all amounts from all Parts