Question

Jacob Weaver is a contractor operating as a sole proprietorship (EIN 12-3456789).

2018 Gross income: $243,322.25.

Business expenses: Fuel for equipment $64,080.00

                                 Repairs and maintenance $17,342.00

                                 Lubricants for Equipment $9,670.00

                                 Insurance $6,500.00

                                 Wages $6,300.00

                                 Vehicles $1,768.00

                                 Legal and Professional Expenses $1,750.00

                                 Taxes and Licenses $1,412.00

                                  Advertising $300.00

Clients owe him a total of $53,000, for work completed in 2018.

2018 estimated tax payments were $25,000.

He is using a bedroom in his house as a home office. (Square footage of home 5,600 Office 240 sq. ft.)

He has one half-time employee, Martin, who had been unemployed since returning

from Afghanistan, and is disabled.

Martin worked for Jacob for 20 hours a week, for 41 weeks of 2018.

He earned $10,500.

Jacob had to spend $7,350 for disabled access equipment for Martin.

--------------------------------

Scenario

Jacob and Taylor Weaver, ages 45 and 42 respectively, are married and are filing jointly in
2018.

They have three children, Ashley, age 9; Patrick, age 6; and John, age 18.

Social Security numbers are: Jacob, 222-33-4444; Taylor, 555-66-7777; Ashley, 888-99-1234; Patrick, 789-56-4321; John, 123-45-6789.

Taylor works part-time as a paralegal.

She earned $26,000 in 2018.

Taxes withheld: $4,200 withheld.

Estimated tax payments: $25,000.

$350 paid with their 2017 state tax return.

Jacob and Taylor bought their first house in 2018.

Home mortgage interest: $7,246.

Property tax: $2,230.

Federal income withholding: $2,350.

Charities: $4,500.

$435 to rent a moving truck.

$8,000 to put new siding on the house.

$11,600 for child care expenses ($5,800 for each child).

It was paid to Lil Tigers Daycare, 1115 S. Garrison St., Muncie, IN 47305 (EIN 98-7654321).

Taylor is a part-time student at Ball State University in Muncie.

She received a 1098-T indicating tuition and fees for 2018 in the amount of $6,011.

Health insurance for the family, through Taylor's job, cost $6000 for all 12 months of 2018.

They paid deductibles and co-payments of $550.

QUESTIONS

Please can you show all the exclusions to Taxable income and AGI only on a Form 1040 using above information. I have already completed the other parts of the form, I can do the rest additions and subtractions. Thank you

Answer 1

Jacob Weaver
SE tax and SE deduction
Figures for 2018 in dollars
Gross income		243322.25	278472.25	Due from clients		53000	243322.3	Martin's wages		10500
Business expenses:								Martin's disabled eqpt		7350
Fuel for equipment			64080					Total		17850
Repairs & Maintenance			17342
Lubricants for equipment			9670
Insurance			6500
Wages			6300
Vehicles			1768
Legal and Professional Expenses			1750
Taxes and Licences			1412
Advertising			300
Total expenses			109122
Net income			169350.25
Taxable net income			156394.96	0.9235	tax rate
Estimated tax payments			18000
Calculation of SE tax (15.3%)			23928.43
less Estimated tax payments			-18000
Payable for 2018			5928.43
SE deduction			2964.21
Payable for 2018			2964.21

Given here is a scenario that ask to submit schedule A of form 1040 for the year 2018 ,

Schedule A Itemized deductions 2018

Medical & dental exps Medical & dental expenses 1. $ 7200

Amount from Form 1040, line 38 2. $ 127554

Multiply line 2 by 10% (0.10). 3. $ 12755.4

Subtract line 3 from line 1. If line 3 is more than line 1, enter -0 4. 0

Taxes you paid

5. State and local (check only one box): Income tax 5. $ 25000

6. Real estate taxes (see instructions) 6. --

7. Personal property taxes . 7. $ 2230

8. other taxes 8. ---

9. Add lines 5 through 8 . 9. $ 27230

Interest You Paid

10. Home mortgage interest paid 10. $  7246

11. Mortgage points not recorded 11. ----

  12 Points not reported to you on Form 1098 12. ----

13 Mortgage insurance premiums 13. ---

14 Investment interest. 14. ---

15 add line for 11 through 14 15. $ 0

Gifts to Charity

16. Gifts by cash 16. $ 4500

17. other than cash 17. ----

18. carryover from prior year 18. ----

19. Add lines 16 through 18 . . 19. $ 4500

Casualty and Theft Losses

20. Casualty or theft loss(es). 20. ----

Job Exps & Miscellaneous Deductions

21.Unreimbursed employee expenses 21. ---

22.Tax preparation expenses 22. ---

23.other expenses 23. ---

24.Add lines 21 through 23 . 24. ---

25. Enter amount from Form 1040, line 38 25. $ 127554

26. Multiply line 25 by 2% (0.02) . . 26. $ 2551.08

27. Subtract line 26 from line 24. If line 26 is more than line 24, enter -0- 27. $ 0

Other Miscellaneous Deductions

28. Other—from list in instructions. 28. ---

Total Itemized Deductions  

29. Is Form 1040, line 38, over $155,650?

No. Your deduction is not limited. 29. $ 27551.08

(Add the amounts in the far right column for lines 4 through 28. Also, enter this amount on Form 1040, line 40.)