Reference no: EM132885402

Paul is 66 years old and Tina is 62 years old. In 2020, they file a joint return.

Wages............................................................... $ 170,000.00

Interest from savings.......................................... $12,000.00

Interest on NYS qualified bonds........................... $7,000.00

Inheritance from Tina's Aunt Lucy....................... $6,000.00

Child support from Tina's ex-husband Eric........ $10,000.00

Prize from contest at church.................................. $1,000.00

Paul and Tina own a house in Whitestone. The costs associated with the house were as follows:

Mortgage interest $7,000.00

Please note that the couple's mortgage balance is less than $750,000.00

Real estate taxes $8,000.00

They paid hospital bills of $7,000.00 and doctor's bills of $6,000.00. Their medical insurance company reimbursed them in the amount of $3,000.00 for the doctor's bills. They had prescriptions in the amount of $500.00 and a yearly vitamin expense of $200.00.

Their charitable contributions included:

• $2,000.00 paid to St. Mary's Church
• $ 500.00 paid to Mr. and Mrs. Elm whose house was damaged in a flood

Problem 1. What is Paul's and Tina's gross income?

Problem 2. What is Paul and Tina's adjusted gross income?

Problem 3. What is Paul and Tina's standard deduction without regard to their itemized deductions?

Problem 4. What is Paul and Tina's net itemized deduction?

Problem 5. How much of the charitable deductions are deductible?

Problem 6. What is Paul and Tina's taxable income?

Problem 7. What is Paul and Tina's tax liability?