Austin and Anya Gould are a? middle-aged couple with two? children, Rusty, age 13 and? Sam, age? 11, both of whom they adopted this year. They also bought a new home in the area to give the children a yard in which to play. The Goulds also have an extensive retirement portfolio invested primarily in? growth-oriented mutual funds. Their annual investment income is only $600?, none of which is attributable to capital gains. Austin works in the banking industry and receives an annual income of $32,400. ?Anya, who owns the only travel agency in? town, makes about ?39,600 a year.The Goulds give extensively to charities. They also have tax deductions from their mortgage interest? expense, business? expenses, tax? expenses, and unreimbursed medical expenses LOADING... . Remember that Anya has some special tax expense deductions because she is? self-employed. Be sure to include them when estimating their 2014 taxes. In calculating? Anya's Social Security and Medicare? taxes, ignore the special FICA rate for 2014 and use the FICA rates of? 6.20% for Social Security and? 1.45% for Medicare. a. Calculate? Anya's Social Security and Medicare taxes. Calculate how much of these taxes are deductible. b. Calculate the Goulds total income and adjusted gross income for the year. c. Are the moving expenses? deductible? Why or why? not? d. Should the Goulds take the standard deduction or should they? itemize? What is the amount of their? deduction? e. What tax form will the Goulds? use? Why? f. What credits might the Goulds use to reduce their tax? liability?
The? Goulds' expenses are as? follows:
Health insurance? (provided by? Anya) ?$2,300
?Rusty's braces ?$1,300
Mortgage interest expense ?$7,250
Real estate taxes ?$800
Investment and tax planning expenses ?$1,400
Other medical expenses ?$3,800
Charitable contributions ?$3,500
Moving expenses ?$2,900
?Austin's unreimbursed business expenses ?$2,350
Qualified adoption expenses ?$7,300
State taxes withheld and owed ?$3974