Marcus (age 46) and Stephanie (age 45) are married. Stephanie works as a manager
ID: 2461146 • Letter: M
Question
Marcus (age 46) and Stephanie (age 45) are married. Stephanie works as a manager and Marcus is a self-employed but does not maintain a home office. Their 2015 tax and other information are as follows:
Salary – Stephanie 65,000
Federal withholding on salary 20,000
State withholding on salary 3,000
Interest income on municipal bonds:
State of Connecticut 2,000
Savings account interest 900
Dividends from PRK, Inc. (all are non-qualified) 5,000
Value of employer provided medical insurance 2,000
Inheritance from Stephanie’s father’s estate 7,000
Interest paid on personal car loan 800
Interest paid on personal loan 1,500
Child support paid to Marcus’s ex-wife 12,000
Alimony paid to Marcus’s ex-wife 5,000
Qualified Out of Pocket Medical Expenses 3,000
Donations to church 1,500
Real Estate taxes on primary residence 7,000
Mortgage interest on primary residence (<$1M) 5,000
Marcus’s business revenues 55,000
Marcus’s business expenses 15,000
Required: Using the tax formula format, determine the following for their 2015 tax year (show all calculations):
a. All Income
b. Exclusions (if any)
c. Gross income (including Marcus’s SE income)
d. Deductions For AGI
e. Adjusted gross income
f. Itemized deduction or standard deduction amount
g. Deduction for exemptions
h. Taxable income
i. Income tax liability
j. Self-employment tax liability
k. Net tax due or refund (show calculation)
Explanation / Answer
Marcus Stephanie Total Income under head Salaries 67000 67000 Business/Professional Income 40000 40000 Income from other sources 5900 5900 Gross Total Income 112900 Less : Itemised Deductions Alimony paid Marcus ex-wife 5000 Qualified medical Expenses 3000 Real estate Taxes 7000 Mortgage Interest 5000 20000 Less : Personal deductions 8000 Less : Standard deduction 12600 Taxable Income 72300 10% $0 – $18,450 1845.00 15% $18,451 – $74,900 8077.35 25% $74,901 – $151,200 28% $151,201 – $230,450 Total estimated tax 9922.35 Taxes withheld FICA 20000 State 3000 Total taxes paid 23000 Refund 13077.65 Workings :- 1) Income from other sources Interest on Municipal bonds 2000 (exempt) Saving account Interest 900 Dividend 5000 Total 5900 2) Personal deduction A flat amount per person is allowed as a deduction forpersonal exemptions. For 2015 this amount is $4,000. 3) Standard deduction For 2015, the standard deduction is $6,300 for single individuals, $12,600 for a married couple, and $9,250 for a head of household.