$750 = $25,550 − $24,400
104. Hansel and Gretel are married taxpayers who file a joint income tax return for 2020. They have no dependents. On their 2020 income tax return, they have adjusted gross income of $62,000 and total itemized deductions of $4,000. What is their taxable income?
ANSWER:
$37,200 = $62,000 − $24,800
105. Rod, age 50, and Ann, age 49, are married taxpayers who file a joint return for 2020. They have gross income of $150,700. Their deductions for adjusted gross income are $5,100 and they have itemized deductions of $18,000, consisting of $10,000 in state income taxes and $8,000 in mortgage interest expense. If they have no dependents for 2020, calculate the following amounts:
a. Their adjusted gross income
b. The greater of the amount of their standard deduction or their itemized deductions
c. Their taxable income
ANSWER:
a. $145,600 = $150,700 − $5,100
b. $24,800
c. $120,800 = $145,600 − $24,800
106. Theodore, age 74, and Maureen, age 59, are married taxpayers with two dependents. Their adjusted gross income for the 2020 tax year is $43,600, and they have itemized deductions of $7,800. Determine the following for Theodore and Maureen's 2020 income tax return:
a.
The greater of the amount of their standard deduction or their itemized deductions
b.
Their taxable income
ANSWER:
a.
$26,100 = $24,800 + $1,300
b.
$17,500 = $43,600 − $26,100
107. George, age 67, and Linda, age 60, are married taxpayers with three dependent children. Their adjusted gross income for the 2020 tax year is $142,000. They have itemized deductions of $24,600. Determine the following for their joint tax return for 2020:
a.
Exemption deduction amount
b.
The greater of the amount of their standard deduction or their itemized deductions
c.
Taxable income
ANSWER:
a.
$0
b.
$26,100 ($24,800 + $1,300)
c.
$115,900 = $142,000 − $26,100
108. For each of the following situations, indicate whether the taxpayer(s) is(are) required to file a tax return for 2020. Explain your answer.
a.
Debra, age 68, and Jerry, age 70, are married and file a joint return. They received $24,500 in interest income from a savings account.
b.
Margie is a single taxpayer with wages of $8,400 and interest income of $200.
c.
Janie, age 30, and Scott, age 28, are married and file a joint tax return. They had $17,000 in earnings from wages.
d.
Kim, age 20, is a single college student who is claimed as a dependent by her parents. She earned $2,000 from a part-time job and has $450 in interest income.
e.
Stefanie, a 25-year-old single taxpayer, has wages of $1,500, from which $80 of federal income tax was withheld.
ANSWER:
a.
No. The standard deduction of $24,800 plus 2 additional standard deductions of $1,300 each add up to $27,400, which is more than their income of $24,500.
b.
No. Income of $8,600 is less than the $12,400 standard deduction.
c.
No. The income of $17,000 is less than the $24,800 standard deduction.
d.
Yes. Gross income is more than the larger of $1,100 or $2,350 (earned income of $2,000 plus $350).
e.
No. Stefanie is not required to file a tax return, but she must file if she wishes to receive a refund of the income tax withheld.
109. Monica is a maid in a San Francisco hotel. Monica received $500 in unreported tips during 2020 and owes Social Security and Medicare taxes on these tips. Her total income for the year, including tips, is $4,500. Is Monica required to file an income tax return for 2020?
Why?
ANSWER:
Yes. Monica must file a return and pay Social Security and Medicare taxes on the unreported tips.
110. Jeri is single and supports her 45-year-old son who has income of $350 from working in a pumpkin patch during October and lives in his own apartment.
a. Can she claim him as a dependent?
b. Can she claim head of household filing status? Why or why not?
ANSWER:
a. Yes, her son qualifies as a dependent.
b. No. Her son must live in the same household with Jeri in order for Jeri to be able to file as head of household.