Comprehensive Tax Problem
Joseph and Diane are both 35 and have no dependents. If your clients receive a refund, they want the full amount refunded to them. Diane is currently pregnant and will give birth during the next tax year.
Joseph - SSN: 400-20-0100
Diane - SSN: 200-40-8000
Joseph works as a salesman and, at the company's request, maintains an office in his home. During the current year Joseph earned total compensation from his job of $125,000. Following are the deductions from his pay.
Federal Withholding $20,000
FICA $7,347
Medicare $1,813
Virginia Withholding $4,000
Diane is a nurse and earned total compensation of $45,400. Following are the deductions from her pay.
Federal Withholding $5,000
FICA $2,815
Medicare $658
Virginia Withholding $2,000
Joseph and Diane have investments in stocks and have a saving account at a local bank. During the current year they earned $1,450 in interest from the Bank of Virginia. They received qualified stock dividends of $5,950 from GE stock. They also traded in the stock market during the year and had the following results.
LTCG $4,900
LTCL $(3,200)
STCG $0
STCL $(7,800)
They have no loss carryover from previous years
As a salesman, Joseph travels for his job and incurred the following expenses. Joseph was reimbursed by his employer according to an accountable plan for $5,080 of the following expenses. He received $3,560 reimbursement for hotel, tips, and laundry expenses and $1,520 for meals and entertainment expenses.
Hotel $4,200
Meals $820
Entertainment of customers $1,080
Tips $100
Laundry and dry cleaning $150
Total $6,350
Joseph uses his personal vehicle for traveling for his job. During the current year he drove the car a total of 38,000 and 32,000 of those miles were for business. Joseph is reimbursed $0.30 per business mile by his company. He also had business-related parking fees and
tolls totaling $280. Joseph uses the standard mileage method for deducting auto expenses. Joseph's reimbursement for business mileage is $9,600.
Joseph incurred expenses for the business use of his home. The amount Joseph can report on his Form 2106 Line 4 is $4,265. Joseph did not receive any reimbursements for these expenses.
Diane incurred the following business expenses in connection with her nursing job.
Professional Dues $450
Professional Journal $200
Uniforms $350
The couple have the following additional expenses for the year
Health Insurance (after-tax) $4,400
Doctor bills $470
Real estate taxes (entire house) $2,200 (10% is allocated to the business)
Personal property taxes $400
Mortgage Interest (entire house) $15,600 (10% is allocated to the business)
Charitable contributions - cash $9,000
Charitable contributions - Stock GE stock owed 5 years:
FMV $8,000
Adjusted basis $2,000
Tax preparation fees $750
Schedule A - Itemized Deductions - Complete all sections of the Schedule A to determine the total itemized deductions.
Form 1040 - You will finalize your Form 1040
Complete Line 40 - determine if the Smith's should use the standard deduction or itemized deduction amount
Complete Line 43 - Taxable Income
Complete Line 44 - Determine the amount of tax owed by the Smiths using the 2015 Tax Table.
Complete Line 47 & 63 - Same amount as Line 44
Complete Line 74, 75, 76a or 78 based on if the Smith's owe tax.
Attachment:- Assignment Files.rar