06 Graded Assignment Jeremy and Alyssa Johnson have been ma

? 06 Graded Assignment Jeremy and Alyssa Johnson have been maried for five years and do not have any children. Jeremy was married previously and has one child from the prior marriage. He is sell employed and operates hits own computer repair store. For the first two months of the year, Alyssa worked for Office Depot as an employee. In March, Alyssa accepted a new job with Super Toys Inc. (ST), where she worked for the remainder of the year. This year, the Johnsons received $255,000 of gross income. a. Expenses associated with Jeremy\'s store inckude $40,000 in salary (and employment taxes) to employees. $45.000 of supplies. and $18,000 in rent and other administrative expenses b. As a salesperson, Alyssa incurred $2.000 in travel expenses related to her employment that were not reimbursed by her employer c The Johnsons own a piece of raw land held as an investment. They paid $500 of real property taxes on the property and they incurred $200 of expenses in travel costs to see the property and to evaluate other similar potential investment properties d. The Jobnsons own a rental home. They incurred $8,500 of expenses assoclated with the property e. The Johnsons\' home was only five miles from the Office Depot store where Alyssa worked in January and February. The ST store was 60 milies from their home, so the Johnsons decided to move to make the commute easier for Alyssa. The Johnsons new home was only 10 miles from the ST store. However, their new home was 50 miles from their former residence. The Johnsons paild a moving company $2,002 to move their possessions to the new location. They also drove the S0 miles to their new residence They stopped along the way for lunch and spent $60 eating at Denny\'s None of the moving expenses were relmbursed byST t. Jeremy paid $4.500 for health Insurance coverage for himself Inot through an exchange). Alyssa was covered by health plans provided by her employer, but Jeremy is not eligible for the plan until next year g. Jeremy paid $2,500 in sell employment taxes ($1250 represents the employer portion of the self-employment taxes) h. Jeremy pald $5,000 in alimony and $3.000 in child support from his prior marriage L. Alyssa paid $3,300 of tuition and fees to attend night classes at a local university. The Johnsons would like to deduct as much of this expenditure as possible rather than claim a creda . The Johnsons donated $2,000 to their favorite charity. Determine the Johnsoms AGI given the following information assume the 201? rules apply for purposes of the qualified education expense deduction): Married fillng jointly (Round your intermediote computations to the nearest whole doilar value.) C Prev 5 of S DOLL

Solution

Johnson\'s AGI computation

Description

Amount

Details

Gross Income

$255000

Entire income of Johnsons

a) Jeremy’s Expenses like Salary, Supplies, Rent & Administrative Expense($40000+45000+18000)

$103000

Jeremy’s ordinary business expenses

b)Alyssa’s Travel Expense

-

Since its unreimbursed, its deductible from AGI

c)Investment property taxes and expenses

-

Investment expenses and Property taxes are deductible from AGI

d)Rent Expense

$8500

Regardless of business or investment, rent is deductible for AGI

e)Alyssa’s moving expenses

$2012

As the distance from her old residence to her new place of employment was more than 50 miles, Alyssa is allowed to deduct moving expenses of her personal belongings but meals are not deductible. Mileage rate is 23.5cents(50*0.235 +2000)

f)Health Insurance

$4500

Jeremy can deduct the full amount spent on his health insurance, Since he is not eligible for ST’s health plan

g)Self employment tax

$1250

Only employer portion is allowed

h)Alimony

$5000

Alimony is allowed

i)Education Expenses

$2000

As Jeremy is married filing jointly and his modified AGI ($130,738) without the education deduction is > than $130,000, his deduction is the lesser of (1) $3,100 actual qualified education expenditures and (2) $2,000

j)Donations

0

Deductible from AGI

Total for AGI Deductions

$126262

The Johnson’s AGI

$128738

Description	Amount	Details
Gross Income	$255000	Entire income of Johnsons
a) Jeremy’s Expenses like Salary, Supplies, Rent & Administrative Expense($40000+45000+18000)	$103000	Jeremy’s ordinary business expenses
b)Alyssa’s Travel Expense	-	Since its unreimbursed, its deductible from AGI
c)Investment property taxes and expenses	-	Investment expenses and Property taxes are deductible from AGI
d)Rent Expense	$8500	Regardless of business or investment, rent is deductible for AGI
e)Alyssa’s moving expenses	$2012	As the distance from her old residence to her new place of employment was more than 50 miles, Alyssa is allowed to deduct moving expenses of her personal belongings but meals are not deductible. Mileage rate is 23.5cents(50*0.235 +2000)
f)Health Insurance	$4500	Jeremy can deduct the full amount spent on his health insurance, Since he is not eligible for ST’s health plan
g)Self employment tax	$1250	Only employer portion is allowed
h)Alimony	$5000	Alimony is allowed
i)Education Expenses	$2000	As Jeremy is married filing jointly and his modified AGI ($130,738) without the education deduction is > than $130,000, his deduction is the lesser of (1) $3,100 actual qualified education expenditures and (2) $2,000
j)Donations	0	Deductible from AGI
Total for AGI Deductions	$126262
The Johnson’s AGI	$128738