Determine the amount of tax owed by the smiths

Assignment Help Taxation

Reference no: EM131825603

Comprehensive Tax Problem

Joseph and Diane are both 35 and have no dependents. If your clients receive a refund, they want the full amount refunded to them. Diane is currently pregnant and will give birth during the next tax year.

Joseph - SSN: 400-20-0100

Diane - SSN: 200-40-8000

Joseph works as a salesman and, at the company's request, maintains an office in his home. During the current year Joseph earned total compensation from his job of $125,000. Following are the deductions from his pay.

Federal Withholding $20,000

FICA $7,347

Medicare $1,813

Virginia Withholding $4,000

Diane is a nurse and earned total compensation of $45,400. Following are the deductions from her pay.

Federal Withholding $5,000

FICA $2,815

Medicare $658

Virginia Withholding $2,000

Joseph and Diane have investments in stocks and have a saving account at a local bank. During the current year they earned $1,450 in interest from the Bank of Virginia. They received qualified stock dividends of $5,950 from GE stock. They also traded in the stock market during the year and had the following results.

LTCG $4,900

LTCL $(3,200)

STCG $0

STCL $(7,800)

They have no loss carryover from previous years

As a salesman, Joseph travels for his job and incurred the following expenses. Joseph was reimbursed by his employer according to an accountable plan for $5,080 of the following expenses. He received $3,560 reimbursement for hotel, tips, and laundry expenses and $1,520 for meals and entertainment expenses.

Hotel $4,200

Meals $820

Entertainment of customers $1,080

Tips $100

Laundry and dry cleaning $150

Total $6,350

Joseph uses his personal vehicle for traveling for his job. During the current year he drove the car a total of 38,000 and 32,000 of those miles were for business. Joseph is reimbursed $0.30 per business mile by his company. He also had business-related parking fees and
tolls totaling $280. Joseph uses the standard mileage method for deducting auto expenses. Joseph's reimbursement for business mileage is $9,600.

Joseph incurred expenses for the business use of his home. The amount Joseph can report on his Form 2106 Line 4 is $4,265. Joseph did not receive any reimbursements for these expenses.

Diane incurred the following business expenses in connection with her nursing job.

Professional Dues $450

Professional Journal $200

Uniforms $350

The couple have the following additional expenses for the year

Health Insurance (after-tax) $4,400

Doctor bills $470

Real estate taxes (entire house) $2,200 (10% is allocated to the business)

Personal property taxes $400

Mortgage Interest (entire house) $15,600 (10% is allocated to the business)

Charitable contributions - cash $9,000

Charitable contributions - Stock GE stock owed 5 years:

FMV $8,000

Adjusted basis $2,000

Tax preparation fees $750

Schedule A - Itemized Deductions - Complete all sections of the Schedule A to determine the total itemized deductions.

Form 1040 - You will finalize your Form 1040

Complete Line 40 - determine if the Smith's should use the standard deduction or itemized deduction amount

Complete Line 43 - Taxable Income

Complete Line 44 - Determine the amount of tax owed by the Smiths using the 2015 Tax Table.

Complete Line 47 & 63 - Same amount as Line 44

Complete Line 74, 75, 76a or 78 based on if the Smith's owe tax.

Attachment:- Assignment Files.rar

Reference no: EM131825603

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