Question

Alfred E. Old and Beulah A. Crane, each age 42, married on September 7, 2016. Alfred and Beulah will file a joint return for 2018. Alfred's Social Security number is 111-11-1112. Beulah's Social Security number is 123-45-6789, and she adopted "Old" as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304.

Alfred was divorced from Sarah Old in March 2016. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah's death, whichever occurs first. Alfred pays Sarah $15,000 in 2018. In addition, in January 2018, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years' income taxes. Sarah's Social Security number is 123-45-6788.

Alfred's salary for 2018 is $150,000, and his employer, Cherry, Inc. (Federal I.D. No. 98-7654321), provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes.

Beulah recently graduated from law school and is employed by Legal Aid Society, Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives a salary of $42,000 in 2018. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes.

Beulah has $500 in qualified dividends on Yellow Corporation stock she inherited. Alfred and Beulah receive a $1,900 refund on their 2017 state income taxes. They itemized deductions on their 2017 Federal income tax return (total of $15,000). Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2018. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Both spouses had health insurance for all months of 2018 and do not want to contribute to the Presidential Election Campaign.

Schedule A Information Provide the following that would be reported on Alfred and Beulah's Schedule A: 1. Calculate the deduction allowed for medical and dental expenses. 2. Calculate the deduction for taxes. 3. Calculate the deduction for interest. 4. Calculate the charitable deduction allowed. 5. Calculate total itemized deductions Schedule B Information Provide the following that would be reputed on Alfred and Beulah's Schedule B: 1. Determine the amount reported as interest amount: 2. Determine the amount reported as ordinary dividends: Uniform Prerriurns for Group Term Life Insurance Click here to view the Exhibit for Uniform Premiums for $1,000 of Group Term Life Insurance Protection 2018 Tax Rate Schedules 2018 Tax Rate Schedules Use the 2016 Tax Rate Schedules to compute the tax.

Answer 1

Calculation of federal Tax liability

Particulars	Amount($)
Gross salary of alfred	150000
Add insurance premium	300	as upto $ 50000 roup insuarance is tax free above that is taxable in hand of employee = 300000-50000 = 250000/1000*.10 *12 ( formula used as per pub 15b) =300
Gross salary of Beulah	42000
taxable Gross Income	192300	Gross salary of alfred + Gross salary of Beulah
Less Alimony to sarah	-65000	As divorce happened before 31 dec 2018, so the alimony paid can be deducted from gross income , as 50000 for property settlement will treated as alimony as its paid in cash so total alimony = 15000+50000
Add Refund of sale tax	1900	Included in income as we have taken itemized deduction last year and last year refund of sales tax cannot be itemized
Adjustable Gross Income	129200
less standard deduction	-24000	As itemized deduction is only $ 16900, which Is less than $24000standard deduction , so its beneficial to take standard deduction
Taxable income before Dividends	105200
Taxes on Taxable income before dividends :
Tax liability on base bracket	8907	Upto 19050 @ 10% =1905 (77400-19050 )@ 12%=7002
Tax liability on excess over base@22%	6116	$(105200-77400 )*22%
Tax on Taxable income dividends	15023
Taxes on dividends :
dividends	500
Tax on dividend @ 15%	75
total federal tax liability	15098	=15023+75
less federal with holding	-32400	24900 of alfred+7500 of beulah
refund	$ 17302	32400-15098

Calculation Of Itemised Deduction

Medical And dental expenses exceed 7.5% of Adjustable income	0	As per publication 502 if you are covered under social securtity tax , then you cannot deduct amount as medical expense
Interest	4500
sales tax and property tax	10000	sales tax and property taxes are limited to $10000 property tax =$ 1450 sales tax =$1400 state income tax of alfed = $8000 state income tax of beulah=$2400 Total tax = 13250 but allowed upto $10000
charitable deduction	2400	upto 60% of adjustable income is allowed =128900*60% =77340 as charitable deduction is full allowed which is $2400
Total itemized deduction	$ 16900

Answers

Filling status = MArried filling jointly

Taxable gross income= $192300

Total adjustment for AGI = $63100

Adjustable Gross Income = $129200

standard deduction =$24000