Bob (age 40) and Susan (age 39) Cowen are married. Susan works as a retail manag
ID: 2451376 • Letter: B
Question
Bob (age 40) and Susan (age 39) Cowen are married. Susan works as a retail manager and Rob is a self-employed electrician but does not maintain a home office. Their 2015 tax and other information are as follows:
Salary – Susan
75,000
Federal withholding on salary
24,000
State withholding on salary
4,000
Interest income on municipal bonds:
State of Connecticut
2,000
Savings account interest
900
Dividends from RGR, Inc. (all are non-qualified)
4,000
Value of employer provided medical insurance
2,000
Inheritance from Susan’s father’s estate
7,000
Interest paid on personal car loan
800
Interest paid on personal loan
1,000
Child support paid to Bobb’s ex-wife
10,000
Alimony paid to Bob’s ex-wife
3,000
Qualified Out of Pocket Medical Expenses
4,000
Donations to church
Real Estate taxes on primary residence
2,500
6,000
Mortgage interest on primary residence (<$1M)
4,000
Bob’s business revenues
50,000
Bob’s business expenses
17,000
Required: Using the tax formula format, determine the following for the Cowen’s 2015 tax year (show all calculations)
All Income $___________
Exclusions (if any) $ ___________
Gross income (including Bob’s SE income) $ ___________
Deductions For AGI $ ___________
Adjusted gross income $ ___________
Itemized deduction or standard deduction amount $ ___________
Deduction for exemptions $ ___________
Taxable income $ ___________
Income tax liability $ ___________
Self-employment tax liability $ ___________
Net tax due or refund (show calculation) $ ___________
Please show all calcs thank you
Salary – Susan
75,000
Federal withholding on salary
24,000
State withholding on salary
4,000
Interest income on municipal bonds:
State of Connecticut
2,000
Savings account interest
900
Dividends from RGR, Inc. (all are non-qualified)
4,000
Value of employer provided medical insurance
2,000
Inheritance from Susan’s father’s estate
7,000
Interest paid on personal car loan
800
Interest paid on personal loan
1,000
Child support paid to Bobb’s ex-wife
10,000
Alimony paid to Bob’s ex-wife
3,000
Qualified Out of Pocket Medical Expenses
4,000
Donations to church
Real Estate taxes on primary residence
2,500
6,000
Mortgage interest on primary residence (<$1M)
4,000
Bob’s business revenues
50,000
Bob’s business expenses
17,000
Explanation / Answer
Statement showing computation of tax
Particulars Amount Amount Salary of susane $75000 Interest income on bonds $2000 Savings account interest $900 Dividend from RGR $4000 Valu of employer provided medical insurance $2000 Inheritance from susan's father's estate $7000 Bob's business revenue $50000 All income $140900 Less: Exclusions Business expenses $17000 inhritance from susane's father' estate $7000 Interest paid on car loan $800 Interest paid on personal loan $1000 $25800 Gross Income $115100 Deductions for AGI Child support paid to bob's ex wife $10000 Alomony paid to bob's ex wife $3000 Qualified out-of-pocket medical expenses $4000 Donation to church $2500 Real estate taxes on primary residence $6000 Mortgag interest on primary residence $4000 $29500 Adjusted gross income $85600 Less: Deduction for exemptions Dividend $4000 Taxable income $81600 Tax liability On $74900 $10312.50 On $74901 to $81600 @ 25% $1675 $11987.50 Less: Self employment tax liability $28000 Tax refundable ($16012.50)