Bob and Jane Doe are married and have one dependent child, Carol. They reside at
ID: 3184408 • Letter: B
Question
Bob and Jane Doe are married and have one dependent child, Carol. They reside at 14000 Jericho Park Road, Bowie, MD 20715. Carol, 19 years old, is a full-time student at Bowie State University. Bob works as a design engineer for a manufacturing firm while Jane runs a craft business from their home. Jane's craft business consists of making craft items for sale at the Bowie State University Bookstore. Jane spends considerable time and effort on her craft business and it has been consistently profitable over the years. Bob and Jane own a home and pay interest on their home loan (balance of $220,000) and a personal loan to pay Carol's college expenses. Neither Bob nor Jane are blind or over age 65, and they plan to file as married joint. Bob and Joan have summarized the income and expenses they will report this year, as shown below. Requirements for tax year 2016: A. Prepare a line-by-line analysis that reveals their taxable income and taxes owed or refund due for the year. Use p. 3-3 of the textbook as a mondel. B. Attached a copy of the income and expenditures given below. C. Prepare pages 1 and 2 of Form 1040, and Schedules A, C, and SE (page 1 only). D. Print and sign your name as the tax prepare, on p. 2 of Form 1040. E. Staple, in the left-hand corner, the submission, in the following order: The problem and data Line-by-line analysis Form 1040, followed by the supporting schedules, in numerical · orderExplanation / Answer
SINCE , BOTH ARE NOT BLIND OR NEITHER OF THEM IS ABOVE 65.NAD JANE IS EARNING FROM HER PERSONAL SKILLS SO THEY BOTH ARE TAXED INDIVIDUALLY FOR TAX PURPOSE.
CALCULATION OF TAX INDIVIUALLY:
BOBS TAXABLE INCOME:
INCOME EARNED
(a)BOBS SALARY =$137,560
ADD:INEMPLOYMENT PAYMENTS =$6700
TOTAL INCOME =$144260
LESS: EXPENSES
FEDERAL INCME TAX WITHHELD FROM BOB WAGES =$13,595
STATE INCOME TAXES WITHHELD FROM BOB WAGES=$7000
SOCIAL SECURITY TAXES WITHHELD FROM BOB WAGES =$8529
BOB PAID ALIMONY TO HIS EX WIFE =$7750
BAB PAID EXPENSES TO EX WIFE FOR HIS CHILDREN =$8700
TOTAL EXPENSES = $45,574
NET INCOME UNDER HEAD SALARY =$98688
(B)INCOME UNDER HEAD PGBP(JANE)
INCOME:
JANE CRAFT SALES =$16400
LESS: EXPENSES
TRAVEL EXPENSES RELATING TO CRAFT SHOWS =$2850
SALES TAX PAID =$2100
EMPLOYEE EXPENES =$2100
COST OF CRAFTS =$6125
POSTGE COST =$212
NET INCOME UNDER HEAD PGBP =$3013
(C)INCOME UNDER HEAD HOUSE PROPERTY
REAL ESTATE TAX PAID ON RESIDENCE =$3995 NET INCOME UNDER HEAD HOUSE PROPERTY ($3995)
(D) INCOME UNDER HEAD CAPITAL GAINS = NIL
(E) INCOME FROM OTHER SOURCES
INCOME:
INTERSET FROM SAVING DEPOSITS =$200
INTEREST FROM US TRESAURY BOND FUNDS =$450
INTEREST FROM MUNICIPAL BONDS = $995
BAB GAMLING WIN =$6700
LESS:
HOME MORTAGE INTEREST PAID =$12549
INT ON MASTER CARD = $750
MEDICAL EXPENSES = $2200
INTEREST PAID ON STUDENT LOANS FOR CAROL = $2399
CASH TO RED SOCIETY =$2750
JANE GAMBLING LOSSES =$1255
NET INCOME UNDER THIS HEAD =($13558)
AS TOTAL TAXABLE INCOME WILL BE &$84148