Show all components of your work for partial credit review. Rob (age 50) and Sus
ID: 2464431 • Letter: S
Question
Show all components of your work for partial credit review. Rob (age 50) and Susan (age 49) 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 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 RGR, Inc. (all are non-qualified) 5,000
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 1,500
Child support paid to Rob’s ex-wife 12,000
Alimony paid to Rob’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
Rob’s business revenues 55,000
Rob’s business expenses 15,000
Required: Using the tax formula format, determine the following for the Cowen’s 2015 tax year (show all calculations):
a. All Income $___________
b. Exclusions (if any) $ ___________
c. Gross income (including Rob’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
Since, there are multiple parts to the question, the first 5 have been answered.
________
Part A)
The value of all income is calculated with the use of following table:
_______
Part B)
The value of exclusions is calculated as follows:
_______
Part C)
The gross income is calculated with the use of following table:
_______
Part D)
The total value of deduction from AGI will be $5,000 towards the alimony paid to Rob’s ex-wife. Child support paid to Rob’s ex-wife cannot be considered as a part of alimony and cannot be claimed as a deduction from AGI.
_______
Part E)
The value of adjusted gross income is calculated as follows:
Salary-Susan 65,000 Rob's Business Revenues 55,000 Savings Account Interest 900 Dividends from RGR 5,000 Value of Employer Provided Medical Insurance 2,000 Interest Income on Municipal Bonds: State of Connecticut 2,000 Inheritance from Susan’s Father’s Estate 7,000 All Income $136,900