Bob (age 40) and Susan (age 39) Cowen are married. Susan works as a retail manag
ID: 2452874 • 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’s2015 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 calculations
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
All Income $151,900 Exclusions (if any) $900 Gross income (including Bob’s SE income) $151,000 Deductions For AGI $15,100 Adjusted gross income $135,900 Itemized deduction or standard deduction amount $13,500 Deduction for exemptions 0 Taxable income $122,400 Income tax liability 9480 Self-employment tax liability 9480 Net tax due or refund (show calculation) 9480