Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1111, respectively. Alice's birthday is September 21, 1963, and Bruce's is June 27, 1962. They live at 473 Revere Avenue. Ames, MA 01850. Alice is the office manager for Ames Dental Clinic, 433 Broad Street, Ames, Ma 01850(employer identification number 98-765432). Bruce is the manager of a Super Burger fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (employer identification number 11-1111111).
The following information is shown on their Wage and Tax Statements ( Form W-2) for 2010.
Line Description Alice Bruce
1 Wages, tips, other compensation $52,600 $61,500
2 Federal income tax withheld 4,180 5,990
3 Social Security wages 52,600 61,500
4 Social Security tax withheld 3,261 3,813
5 Medicare wages and tips 52,600 61,500
6 Medicare tax withheld 763 892
15 State Massachusetts Massachusetts
16 State wages, tips, etc. 52,600 61,500
17 State income tax withheld 2,280 2,990
The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1986, Social Security number 123-45-6788) and John (born February 7, 1990, social Security number 123-45-6786. Both children are full-time students and live with the Byrds except when they are away at college. Cynthia earned $3,700 from a summer internship in 2010, and John earned $3,400 from a part-time job.
During 2010, the Byrds furnished 60% of the total support of Bruce's widower father, Sam Byrds ( born March 6, 1934, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $600,000 on December 28.
The Byrds had the following expenses relating to their personal residence during 2010:
- Property taxes $4,720
- Qualified interest on home mortgage 9,130
- Repairs of roof 4,780
- Utilities 3,810
- Fire and theft insurance 2,290
The following facts relate to medical expenses for 2010:
- Medical insurance premiums $4,380
- Doctor bill for Sam incurred in 2009 and not paid until 2010 7,760
- Operation for Sam 7,310
- Prescription medicines for Sam 860
- Hospital expenses for Sam 2,850
- Reimbursement from insurance company, received in 2010 3,000
The medical expenses for Sam represent most of the 60% Bruce contributed toward his father's support.
Other relevant information follows:
• When they filed their 2009 state return in 2010, the Byrds paid additional state income tax of $950.
• During 2010, Alice and Bruce attended a dinner dance sponsored by the Ames police Disability Association ( a qualified charitable organization). The Byrds paid $400 for the tickets. The cost of comparable entertainment would normally be $160.
• The Byrds contributed $4,800 to Ames Presbyterian Church and gave used clothing (cost of $1,100 and fair market value of $450) to the Salvation Army. All donations are supported by receipts and are in very good condition.
• In 2010, the Byrds received interest income of $2,695, which was reported on a Form 1099-INT from Second National Bank.
• Alice's employer requires that all employees wear uniforms to work. During 2010, Alice spent $482 on new uniforms and $211 on laundry charges.
• Bruce paid $320 for an annual subscription to the Journal of Franchise Management.
• Neither Alice's nor Bruce's employer reimburses for employee expenses.
• The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.
• Alice and Bruce paid no estimated Federal income tax. Neither Alice nor Bruce wishes to designate $3 to the Presidential Election Campaign Fund.
In the interest of privacy and to protect against taxpayer identification misuse, Social Security numbers used throughout the textbook have been replaced with fictitious numbers.
Part 1 - Tax Computation
Compute net tax payable or refund due for Alice and Bruce Byrd for 2010. If they have overpaid, they want the amount to be refunded to them. If you use tax forms for your computations, you will need Forms 1040 and 2106 and Schedules A, B and M. Suggested software: H&R BLOCK At Home.