Comprehensive Problem<?xml:namespace prefix = o ns = \"urn:schemas-microsoft-com

Question

Comprehensive Problem<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Tim and Monica Nelson are married, file a joint return, and are your newest tax clients. They provide you with the following information relating to their 2012 tax return:

1. Tim works as a pediatrician for the county hospital. The W-2 form he received from the hospital shows wages of $150,000 and state income withheld of $8,500.

2. Monica spends much of her time volunteering, but also works as a substitute teacher for the local schools. During the year, she spent 900 hours volunteering. When she doesn

Explanation / Answer

Calculating their taxable income to be $100,377. Their net income is comprised of their wages of $153,888 plus their net capital gains of $17,200 including the gain on the real estate they donated. Total is $171,088. Their itemized deductions are $63,311. This is the total of their state income tax, interest from their home loan, home equity loan, and $51,326 charitable donation of the real estate. The donation is limited to 30% of their AGI. The remainder is carried forward. Their income is too high for them to deduct medical job expenses

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