Exam 5: Deductions for Individuals and Tax Determination

The 2018 standard deduction for a married taxpayer, age 68, who files a separate return is:

Colin (single and age 40) has AGI of $100,000. Colin provided the following information about his cash expenditures for 2018: Interest on loan to purchase corporate securities $ 900 Interest on American Express card 1,200 Points to refinance his home for 10 years at the end of December 2,600 Mortgage interest payments 11,800 Real estate taxes 2,100 State income taxes withheld on salary 5,400 Additional state income tax estimated payment 1,200 Contribution to Republican Party 2,000 Contribution to United Way 500 If Colin does not itemize, what is his total deduction from AGI in 2018:

The deduction for student loan interest has limits placed on it based on the taxpayer's AGI.

George (49) and Jean (36), a married couple with no dependents, have AGI of $2,400,000. They have $120,000 of medical expenses related to a kidney transplant, $80,000 of property taxes on their principal residence, $65,000 of interest expense on the $680,000 acquisition mortgage, and $25,000 in charitable contributions before applying any limitations. If they have a $400,000 preference item, what is their regular taxable income, their alternative minimum taxable income, and their alternative minimum tax in 2018? (Exclude any medicare surtaxes on regular taxable income in your solution.)

Sonja is a talented 18 year-old dancer and has earned quite a bit of money over the last six years that her parents invested for her. During 2018, however, she earned only $5,500 from dancing but $1,900 in interest. If she qualifies as a dependent of her parents, what is her income tax liability in the current year?

Vera and Jake (both age 45) are a married couple with AGI of $327,300 for 2018. They paid $20,000 of mortgage interest, $8,000 of unreimbursed medical expenses, $4,000 of property taxes, and $9,000 of charitable contributions for the year. How much may they claim for itemized deductions in 2018?

To qualify as a dependent, most individuals (except a qualifying child) must earn gross income that is less than an amount equal to:

Marcia and Tim, a married couple, file a joint return in 2018. Marcia went back to college this year as a full-time graduate student. What is the maximum reduction they can achieve in their taxes for the $6,800 in tuition that Marcia pays if their AGI is $116,000 and the LLC phaseout range is $114,000-$134,000?

In 2018, Amber earned a salary of $230,000 and also had the following items of investment income: $28,000 net short-term capital gain on sale of stock, $8,000 dividend income, $6,000 interest income from corporate bonds, and $5,000 interest income from tax-exempt municipal bonds. Compute Amber's net investment income (NII) tax if the tax rate is 3.8% and the threshold is $200,000.

Maurice and Judy (both age 32) have one natural daughter, age 4, and adopted twin boys, age 8. Their adjusted gross income on their joint return is $410,000. If they take the standard deduction, what is their tax liability after any allowable tax credits in 2018 if the child tax credit begins to phase out at $400,000?

For 2018-2025, the personal and dependency exemption is essentially zero. Although the deduction is suspended, the rules for determining who is a dependent may be used in other provisions (such as determining head of household status and the child tax credit).

Surviving spouse status may be claimed for three years after the year of the spouse's death.

Taxpayers can apply any excess FICA tax paid to their income tax liability.

What is Beth's maximum allowable deduction for the following contributions to qualified public charities during the current year if her adjusted gross income is $90,000?

An abandoned spouse must only live apart from his or her spouse during the last six months of the tax year.

Justin, age 42 and divorced, is the sole support of his mother, age 69, who resided in a local nursing home for the entire year. Justin's mother had no income for the year. Justin's filing status is:

Jan and James's divorce is final on December 31 of the current year. They must file married filing separately for the tax year.

Torri is a sixth grade teacher. In 2018, she earned a salary of $33,500. She contributed $675 to her Roth IRA and paid $800 in student loan interest. What is Torri's taxable income and income tax if she is single and does not itemize deductions?

Cliff is married and files a joint return. His return shows AGI of $1,268,000 and a net tax liability of $392,259 on taxable income of $1,224,000. He has $30,000 of preference items and $21,000 of net positive adjustments (including adjustments for itemized deductions). The $109,400 exemption begins to phase out at $1 million. What is his AMTI exemption amount?

A taxpayer's filing status determines the basic standard deduction allowed.