Reference no: EM132998842
Question - Bjorn and Marta are married, ages 63 and 61, respectively, and file a joint federal income tax return for 2020. They provide all of the support for Marta's 91 year old mother who qualifies as the couple's dependent in 2020. They have the following information for their 2020 tax year:
-Salary income $392,000
-Interest income 6,000
-Short-term capital gain 8,000
-Medical expenses for the couple and Marta's mother before the floor 36,450
-Investment interest expense (net investment income for the year is $5,900) 8,900
-Mortgage interest expense (home was acquired in 2018 with acquisition debt of $695,000) 32,250
-State and local sales taxes (there is no state income tax in the state where they reside) 12,000
-Property tax on home 8,200
-Allowed charitable contributions 1,000
-Unreimbursed employee expenses 4,300
-Personal tax return preparation by their CPA 1,500
-Interest paid on home equity loan taken out in 2017 to pay for credit card and consumer debt 1,850
Required - Compute the couple's taxable income for 2020 and the amount of tax or refund due after: (1) all allowable credits; and (2) their total prepayments and withholding during 2020 of $72,000. Ignore the net investment income tax.
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