Federal Tax 1 In Class Homework Problems Chapter 4 USE 2017

Federal Tax 1 In Class Homework Problems Chapter 4 USE 2017 rules. We will discuss in class the impact if this was if this was 2018 1. John and Mary Smith are mamed and file a joint federal ta 17 & 18. John and Mary have the following information for 2017 retum. They have 2 dependent children ages Income John\'s Salary Mary\'s Salary Interest Income from taxable bonds Proceeds from a life insurance policy $ 120,000 $ 80,000 8,000 S 50,000 (John\'s aunt passed away) Deductions: Alimony paid to Mary\'s ex spouse ltemized deductions: $ 25,000 Charitable donations NJ State Income Tax Real Estate Taxes Home mortgage interest $ 5,000 $ 11,000 $ 9,000 6,000 John had $ 19,500 in federal withholding tax withheld from his pay, while Mary had 12,000 withheld A- Calculate the Smith\'s 2017 Gross Income. B-Calculate the Smith\'s 2017 AGI C- Calculate the Smith\'s 2017 Taxable Income D - Calculate the Smith\'s refund or balance due

Solution

John & Mary Smith\'s Income Statement is as below :-

As per above Income Statement

A

GROSS INCOME = $208,000

B

AGI = Gross Income - Total Deduction

= $208,000 - $36,000

AGI = $ 172,000

C

TAXABLE INCOME = AGI - Taxes

= $172,000 - ($19,500 + $12,000 + $11,000 + $9,000) = $172,000 - $51,500

TAXABLE INCOME = $120,500

D

REFUND / BALANCE DUE

A Refund proceeded from a life insurance policy of John Aunt after her death for $50,000

Hence,

REFUND = $50,000

Hence,

Net Income = Taxable Income + Extra Income (Refund)

= $120,500 + $50,000

NET INCOME = $170,500

John & Mary Smith\'s Income Statement 2017
Particulars	Amount
INCOME
John\'s Salary	$120,000
Mary\'s Salary	$80,000
Interest Income from Taxable Bonds	$8,000
GROSS INCOME :-	$208,000
DEDUCTIONS
Alimony paid to Mary\'s Ex Spouse	$25,000
Itemized dedctions :-
Charitable donations	$5,000
Home Mortgage Interest	$6,000
TOTAL DEDUCTIONS :-	$36,000
AGI (Adjusted Gross Income / Income Before Taxes) :-	$172,000
Tax Withheld - John	$19,500
Tax Withheld - Mary	$12,000
NJ State Income Tax	$11,000
Real Estate Taxes	$9,000
TAXABLE INCOME (Income After Taxes) :-	$120,500
Proceeds from a life insurance policy (REFUND)	$50,000
(John\'s aunt passed away)
NET INCOME :-	$170,500