Chapter Review Problems 44 Tax Return Problem -Decision Making Communications Ja
ID: 2566964 • Letter: C
Question
Chapter Review Problems 44 Tax Return Problem -Decision Making Communications Jane Smith, age 40, is single and has no dependents. She is employed as a legal secretary by Legal Services, Inc. She owns and operates Typing services located near the campus of Florida Atlantic University at 1986 campus Drive. Jane is a material participant in the business. She is a cash basis taxpayer. Jane lives at 2020 Oakcrest Road, BLOCK Boca Raton, FL 33431. Jane's Social Security number is 123-45-6789. jane indicates that she wants to designate $3 to the Presidential Election Campaign Fund. Jane had health insurance for all months of 2016. During 2016, Jane had the following income and expense items: 5100,000 salary from Legal Service b. $20,000 gross receipts from her typing services business. c. $700 interest income from Third National Bank. d. $1,o00 Christmas bonus from Legal Services, Inc. e $60,000 life insurance pxoceeds on the death of her sister. f $5,000 check given to her by her wealthy aunt. g $100 won in a bingo game. h. Expenses connected with the typing service: Office rent Supplies Utilities and selephone $7,000 4,400 4,680 5,000 500 3,000 Wages to parrsime sypists Payroll taxes Equipment rentalsExplanation / Answer
Computation of Income Tax payable:
Total Income=$254734
Tax liability:$64521
Form 1040 (officially, the "U.S. Individual Income Tax Return") is one of three IRS tax forms (see variants section for explanations of each) used for personal (individual) federal income tax returns filed with the Internal Revenue Service (IRS) by United States residents for tax purposes.
Income tax returns for individual calendar year taxpayers are due by Tax Day, which is usually April 15 of the next year, except when April 15 falls on a Saturday, Sunday, or a legal holiday. In those circumstances, the returns are due on the next business day. An automatic extension until October 15 to file Form 1040 can be obtained by filing Form 4868.
Form 1040 consists of two full pages (79 lines in total) not counting attachments.[1] The first page collects information about the taxpayer(s), dependents, income items, and adjustments to income. In particular, the taxpayer specifies his/her filing status and personal exemptions on this page. The second page calculates the allowable deductions and credits, tax due given the income figure, and applies funds already withheld from wages or estimated payments made towards the tax liability. At the top of the first page is the presidential election campaign fund checkoff, which allows individuals to designate that the federal government give $3 of the tax it receives to the Presidential election campaign fund.[2] The instructions booklet for Form 1040 is 104 pages as of 2014.[3]
Altogether, over 147 million returns were filed for Form 1040 and its variants in the year 2014,[4] 80% of which were filed electronically.
Form 4684
DEFINITION of 'Form 4684: Casualties And Thefts'
A tax form distributed by the Internal Revenue Service (IRS) used to report casualties and thefts of personal property. Taxpayers can deduct losses stemming from fires, floods and other casualties, as well as robberies, larcenies and other forms of theft. Losses are to be deducted in the tax year that they occurred or, in the case of a theft, when they were discovered.
Personal injury related to the loss, such as bodily injury from a storm that also damaged a home, cannot be deducted. Taxpayers who submit an insurance claim for a loss and receive reimbursement greater than the cost basis of the property may be required to pay additional taxes.
Form 4684 is not to be used for casualties and theft affecting income-producing or business property.