Chec Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 i
ID: 2554021 • Letter: C
Question
Chec Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2017. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from her former husband. Reba also rents out a small apartment building. This year Reba received $30,000 of rental payments from tenants and she incurred $19,500 of expenses associated with the rental Reba and her daughter Heather (20 years old at the end of the year) moved to Georgia in January of this year. Reba provides more than one-half of Heather's support. They had been living in Colorado for the past 15 years, but ever since her divorce, Reba has been wanting to move back to Georgia to be closer to her family Luckily, last December a teaching position opened up and Reba and Heather decided to make the move. Reba paid a moving company $2,010 to move their personal belongings, and she and Heather spent two days driving the 1,426 miles to Georgia During the trip, Reba paid $200 for lodging and $85 for meals. Reba's mother was so excited to have her daughter and granddaughter move back to Georgia that she gave Reba $3,000 to help out with the moving costs Reba rented a home in Georgia. Heather decided to continue living at home with her mom, but she started attending school full-time in January at a nearby university. She was awarded a $3,000 partial tuition scholarship this year, and Reba helped out by paying the remaining $500 tuition cost. If possible, Reba thought it would be best to claim the education credit for these expenses Reba wasn't sure if she would have enough items to help her benefit from itemizing on her tax return. However, she kept track of several expenses this year that she thought might qualify if she was able to itemize. Reba paid $2,800 in state income taxes and $6,500 in charitable contributions during the year. She also paid the following medical- related expenses for her and Heather KPrev rchExplanation / Answer
Description Amount Explanation Gross Income: Salary $ 38,000 Alimony received $ 14,400 Rental receipts $ 30,000 Gift from mother $ - Disability insurance payments $ 1,200 Interest income from corporate bonds $ 2,200 Interest income from municipal bonds $ - (1) Gross income $ 85,800 Deductions for AGI: Expenses for rental property $ 19,500 Moving Expenses $ 2,581 $2,010 (for moving company) + 200 (for lodging) + 371 [for mileage (1,426 × .26 cents a mile)] (2)Total for AGI deductions $ 22,081 (3) AGI $ 63,719 (1-2) From AGI deductions: Medical expenses $ 73 $6,445 – 6,371 [10% × (3)] = $73 State income taxes $ 2,800 Charitable contributions $ 6,500 Casualty loss deduction $ - (4) Total itemized deductions $ 9,373 (5) Standard deduction $ 9,350 (6) Greater of itemized deductions or standard deduction $ 9,373 Greater of (4) or (5) (7) Personal and dependency exemptions $ 8,100 (8) Total from AGI deductions $ 17,473.08 6+7 Taxable income $ 46,246.16 (3)-(8) (9) Tax on taxable income $ 6,299.42 See head of household tax rate schedule; $1,275 + 5,024.42 [15% × (46246.16 – 12,750)] (10) Credits $ 500 (11) Tax prepayments $ 10,000 Tax refund with return $ (4,200.58) (9) – (10) - (11).