Category: Writing

Computation of Tax. Georgia, a single taxpa yer, operates a
business that produces $100,000 of income before any amounts are paid to her.
She has no dependents and no other income. She has itemized deductions of
$18,000 . Compute the total income tax chat would be paid assuming the
following additional facts. Ignore payroll taxes.
a. Georgia operates the business as an S corporation
receiving a salary from the corporation of $70,000 . The corporation
distributes all of its remaining income to the shareholders.
b. She operates the business as a C corporation receiving a
salary from the corporation of $70,000. The corporation distributes its after
tax income to her as a dividend.
c. How would the total tax change in each of the first two
requirements if the corpora – tion made no payments to the owner other than the
salary?

Kiddie Tax. Mike and Linda are a married couple who file
jointly. They have three dependent children who are full-time students in 2019.
Mike and Linda provided $8,000 of support for each child. Information for each
child is as follows:
Compute each child’s tax, assuming the interest income is
taxable.

Computation of Additional Tax Due or Refund. John and
Georgia are married, file jointly, and have three dependents (qualifying
children ages 13, 16, and 18). They have salaries of $130,000, a capital loss
of $8,000, and tax-exempt interest income of $1,000. They paid home mortgage
interest of $10,000, state income taxes of $4,000, property taxes of $2,800,
medical expenses of $3,000, and charitable contributions of $5,000. Federal income
taxes of $11,000 were withheld from their paychecks. Compute the additional tax
due or refund they have when filing their tax return.

1.Kiddie Tax. Lucy is 17 years old and a dependent of her
parents. She receives $9,000 of wages from a part-time job and $10,400 of
taxable interest from bonds she inherited. Determine Lucy’s taxable income and
tax.
2. Child Credit. Lana, an unmarried taxpayer with AGI of
$204, 400, claims three dependent children, all under age 17. What is the
amount of her child credit?

Itemized versus Standard Deduction . Jan, a single taxpayer,
has adjusted gross income of $250,000, medical expenses of $10,000, home
mortgage interest of $3,000, and property taxes of $2,000. Should she itemize
or claim the standard deduction?

Filing Status. For the following independent situations, determine the filing status for the years in question.
a. Wayne and Celia had been married for 24 years before Wayne died in an accident in 2017. Celia and her son, Wally, age 21 in 2017, continued to live at home in 2017, 2018, 2019, and 2020. Wally worked part-time (earning $5,000 in each of the four years) and attended the university on a part-time basis. Celia provided more than 50% of Wally’s support for all four years. What is Celia’s filing status for 2017, 2018, 2019, and 2020?
b. Juanita is a single parent who maintained a household for her unmarried son Josh, age 19. Josh worked full-time and earned $16,000. Juanita provided approximately 40% of Josh’s support but provided all the expenses of maintaining the household. What is Juanita’s filing status?
c. Gomer and Gertrude are married and have one dependent son. In April, Gomer left Gertrude a note informing her that he needed his freedom and he was leaving her. As of December, Gertrude had not seen nor heard a word from Gomer since April. Gertrude fully supported her son and completely maintained the household. What is Gertrude’s filing status assuming she was still legally married?

Head of Household. ln the following situations, indicate
whether the taxpayer qualifies as a head of household.
a. Allen is divorced from his wife. He maintains a household
for himself and his dependent mother.
b. Beth is divorced from her husband. She maintains a home
for herself and supports an elderly aunt who lives in a retirement home.
c. Cindy was widowed last year. She maintains a household
for herself and her dependent daughter, who lived with her during the year.
d. Dick is not divorced, bur lived apart from his wife for
the entire year. He maintains a household for himself and his dependent
daughter. He does not receive any financial support from his wife.

Tracy M. Kidwell (SSN 433-33-3333) is single, 12 years old,
and a dependent of her parents. She resides at 600 S. Maestri Place, New
Orleans, LA 70130. Tracy’s only income is $9,000 of taxable interest, she does
not itemize deductions, and she had no withhold – ings and made no estimated
tax payments. Tracy’s parents (Kelly S. and James R. Kidwell) are married, file
jointly, and list Kelly’s name first on their return (SSN 433-33 -1111).
Prepare Forms 1040 and 8615 for Tracy for 2018. Assume any estimated tax penalty
is zero.