Question

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John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2019, John worked as a computer technician at a local university earning a salary of $152.000, and Sandy worked part-time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions and their itemized deductions were well over the standard deduction amount last year. The Fergusons had qualifying insurance for purposes of the Affordable Care Act (ACA). Use Exhibit 8-9. Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. The Fergusons reported making the following payments during the year: • State income taxes of $4,400. Federal tax withholding of $21,000. • Alimony payments to John's former wife of $10,000 (divorced in 2014). • Child support payments for John's child with his former wife of $4,100. • $12,200 of real property taxes. • Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer. • $3,600 to Kid Care day care center for Samantha's care while John and Sandy worked • $14,000 interest on their home mortgage ($400,000 acquisition debt). $3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car • $15,000 cash charitable contributions to qualified charities. • Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000. a. What is the Fergusons' 2019 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable? (Round your intermediate computations to the nearest whole dollar amount.)

Answer 1

Wages
	John	152000
	Sandy	29000			181000
Business Income		4000
	Expenses	750			3250
Qualifed dividends					800
State tax refund					200
					185250
Standard deduction or itemized deduction
	Standard deduction			24000
	Itemized deduction
	Taxes paid
	Real property taxes(note 3)	12200	10000	10000
	Interest expenses		14000	14000
	Charitable contibutions
	Cash	15000
	Furniture(FMV)	400	15400	9240
	Itemized deduction				33240
	Qualifed business income deduction		4000*20%		800
	Taxable income				151210
	Tax rate				22%
	Federal income tax				33266
	Tax credit
	child tax credit			2000
	Child care credit(Kid day care expenses)	3600*20/100		720	2720
					30546
	Taxes withheld				21000
	Tax due				9546
1	Amlimony paid is not allowed as deduction
2	child support expenses paid to former wife child is disallowed because child is not living with tax payer
3	Taxes allowed upto $10000 only
4	employee business expenses reimbersed is disallowed
5	Home equity loan is disallowed as it is not used home