Reference no: EM132865088

Question - Stephanie and Steven (married filing jointly) engaged in the following transactions during 2020. Answer the questions below (enter your answer without commas or decimal points. For example, if your answer is $1,000, please enter 1000).

a. Steven works at Urbana, Co. where he earned a salary of $85,000. Urbana, Co. also paid $10,000 in educational expenses for Steven to pursue his MBA.

How much of the educational expenses is considered as gross income in Stephanie's and Steven's tax return?

b. Stephanie works at Madison, Co. where she earned a salary of $75,000. Stephanie and Steven participate in a healthcare plan through Madison, Co., where the company covers all insurance premiums ($10,000). Madison, Co. also offers employees discounted on-sight childcare. The couple's two children (ages 6 and 8) both go to childcare at Madison, Co (the total cost of $16,000 is paid half by Madison, Co. and half by Stephanie).

How much of the insurance premiums and the expenses for childcare must be included as gross income in Stephanie's and Steven's tax return?

c. During the year, the couple also received an insurance settlement from a car accident resulting in physical injury. The insurance company paid $23,000 to reimburse medical expenses and $25,000 in lost wages for the period following the accident when Steven was unable to work.

How much of the medical expenses reimbursement and lost wages must be included as gross income in Stephanie's and Steven's tax return, assuming that they paid the disability insurance themselves?

d. Determine Stephanie's and Steven's total AGI.