Jasper and Crewella Dahvill were married in year O. They filed joint tax returns

Question

Jasper and Crewella Dahvill were married in year O. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple's joint year 2 tax return and each spouse's separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella's separate year 3 tax return understated Crewella's self-employment income, causing the joint return year 2 tax liability to be understated by $4,000 and Crewella's year 3 separate return tax liability to be understated by $6,000. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank-be certain to enter "O" wherever required.) b. What amount of tax can the IRS require Jasper to pay for Crewella's year 3 separate tax return? Answer is complete but not entirely correct. Amount of 6,000 tax

Explanation / Answer

1. As per the law Jasper is jointly and individually responsible for any tax, interest, and penalties due on a joint return for a tax year ending before your divorce. This responsibility applies even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns.

In this case for the 3rd year they files there separate return of Income and hence, Jasper is not liable to pay tax of Crewella.

Hence, jasper's liability is 0.

2. Matteo better off is =

Particulars

Amount in $

Income

500

Less: Tax

75

Income after tax

425

Less: car repairing Expenses

400

Better off

25

3. If they ahve additional Desuction of $ 70,000 then Marginal tax rate will be 28%

Particulars

Amount in $

Income

500

Less: Tax

75

Income after tax

425

Less: car repairing Expenses

400

Better off

25

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