to the te.. MF 23 earned a salary of $38,000 in 2017. She is 45 years old and ha
ID: 2544813 • Letter: T
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to the te.. MF 23 earned a salary of $38,000 in 2017. She is 45 years old and has been for four years. She r out a small a $19,500 of expenses assoclated with the rental. g in Colorado for the past 15 years, but ever since and she and Heather spent two days driving the 1,426 miles to move back Reba $3,000 to help out with the moving costs. the remaining $500 tuition cost. If possible, Reba thought it would be best to claim the education credit for these expenses Reba wasn't sure if she would have expenses 1,100Explanation / Answer
a) Description Amount Gross Income: Salary $38,000 Alimony received ($1200 x 12 month) $14,400 Rental receipts $30,000 Gift from mother (gift excluded from income) $0 Disability insurance payments (2000 x (1- 40%) $1,200 40% of payment excluded because Reba paid 40% of premium on insurance policy. Interest income from corporate bonds $2,200 Interest income from municipal bonds 0 Interest on govt.bonds are excluded. 1) Gross income $85,800 Deductions for AGI: Expenses for rental property $19,500 Moving expenses = $2,010 (for moving company) + 200 (for lodging) + 242.42 [for mileage (1426 × .17 cents a mile)] 2452.42 travel meal costs are not deductible 2)Total for AGI deductions $21,952.42 3) AGI =(1-2) $63,847.58 From AGI deductions: Medical expenses $6445 – (10% x $63091.86) (AGI) $60.24 State income taxes $2,800 Charitable contributions $6,500 Casualty loss deduction $900 – 100 = 800 – (10% x 63819.06) $0 4)Total itemized deductions $9,360.24 5) Standard deduction $9,350 Head of household filing status 6)Greater of itemized deductions or standard deduction $9,360.24 7) Personal and dependency exemptions ($4050 x 2) $8,100 8) Total from AGI deductions ( 6+ 7) $17,460.24 Taxable income ( 3 - 8) $46,387.34 9)Tax on taxable income $6,290.6 ($1335 + (46,387.34 - 13350) x 15% year 2017 10) Credits (American opportunity credit of $500 for tuition paid on Heather’s behalf) $500 11) Tax prepayments 10000 Tax Refund ( 9-10 -11) -$4,209.4
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