Question

Sarah Singleton (born July 1, 1970, and Social Security Number 473-12-1234), who lives at 123 Main Street in Mankato, MN 56001 (Blue Earth County), is single, has 20-20 vision, and has no dependents. She works 40 hours per week at a retail store in Mankato, MN, and generates $40,000 of income. Additionally, $10,000 federal income tax and $7,000 of state of MN income tax were withheld from her wages from this job, as reported on her W-2.

During 2019 Sarah’s mother passed away, and Sarah inherited $50,000 in cash. Additionally, her father gave her $20,000 as a birthday present. Sarah placed the money in Wells Fargo Bank and earned $500 of taxable interest income.

Sarah has the following itemized deductions:

State Property taxes on her home $6,000

State of MN income tax withheld of $7,000 (as indicated above)

Home Morgage interest of $5,000

Interest on her car loan of $1,000

Donation to local church $500

Gambling losses of $5,000, Sarah has no gambling winnings

Answer the following items in your post:

1. What is Sarah's Adjusted Gross Income

2. Identify which items qualify as an itemized deduction on Schedule A for the tax year 2019?

3. What are Sarah's total itemized deductions for the tax year 2019?

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Module 3 Discussion Must post first. Respond to the following discussion prompt: Sarah Singleton (born July 1, 1970, and Social Security Number 473-12-1234), who lives at 123 Main Street in Mankato, MN 56001 (Blue Earth County), is single, has 20-20 vision, and has no dependents. She works 40 hours per week at a retail store in Mankato, MN, and generates $40,000 of income. Additionally, $10,000 federal income tax and $7,000 of state of MN income tax were withheld from her wages from this job, as reported on her W-2. During 2019 Sarah’s mother passed away, and Sarah inherited $50,000 in cash. Additionally, her father gave her $20,000 as a birthday present. Sarah placed the money in Wells Fargo Bank and earned $500 of taxable interest income. Sarah has the following itemized deductions: State Property taxes on her home $6,000 State of MN income tax withheld of $7,000 (as indicated above) Home Morgage interest of $5,000 Interest on her car loan of $1,000 Donation to local church $500 Gambling losses of $5,000, Sarah has no gambling winnings Answer the following items in your post: 1. What is Sarah's Adjusted Gross Income 2. Identify which items qualify as an itemized deduction on Schedule A for the tax year 2019? 3. What are Sarah's total itemized deductions for the tax year 2019?

Answer 1

1:COMPUTATION OF SARAHS GROSS INCOME
INCOME	NATURE	AMOUNT($)
Income from retail store	taxble	57000	SEE NOTE 1
Other income	taxble	15500	SEE NOTE 2
GIFT from father	taxble	20000	SEE NOTE 3
TOTAL GROSS INCOME FOR THE YEAR		92500
2:ITEMS QUALIFIED FOR DEDUCTION UNDER SCHEDULE A
ITEM	SECTION	AMOUNT($)
State of MN income tax withheld	5a	7000
State property tax on home	5c	6000
Home mortgage interest	8a	5000
Donation to local church	11	500	SEE NOTE 4
3: TOTAL ITEMIZED DEDUCTION FOR YEAR 2019		18500
NOTE 1:
All incomes from retail store taken as gross income including tax paid
NOTE 2:
other income includes inheritted for mothers death and interest on deposit
NOTE 3:
Cash gift received is fully taxble
NOTE 4:
Donation above $250 must submit instructions