Question

Reba Dixon is a fifth grade school teacher who earned a salary of 38,000 in 2018. 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 rent out a small apartment building. This year Reba receive 50,000 of rental payments from tenant 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 support. They had been living in Colorado for the past 15 years, but ever since her divorced, Reba has been wanting to go back to Georgia to be closer to her family. Luckily last December, a teaching position opened up and Reba and Heather decided to make a 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.
          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 near by university. She was awarded a & 3000 partial tuition scholarship this year and Reba help 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 itemized. Reba paid 5800 in state income taxes and 12500 in charitable contribution during the year. She also paid the following medical related expenses for herself and Heather :
Insurance premiums.     5,795
Medical care expenses   1,100
Prescription medicine         350
Nonprescription medicine. 100
New contact lenses for Heather. 200

   Shortly after the move, Reba got distracted while driving and she ran into a street sign. The accident caused 900 in damage to the car and gave her whiplash. Because the repair was less than her insurance deductible, she paid the entire cost of the repair. Reba wasn't able to work for two months after the accident. Fortunately, she receives 2000 from her disability insurance. Her employer, the central Georgia school district, paid 60%of premium on the policy as a non-taxable fringe benefits and Reba paid the remaining 40% portion.
      A few years ago, Reba acquired several investments with her portion of the divorce settlement. This year she reported the following income from her investments : 2200 of interest income from corporate bonds and 1500 interest income from city of Denver municipal bonds. Overall, Reba stock portfolio appreciated by 12000 but she did not sell any of her stock.
      Heather reported 6200 of interest income from corporate bonds she received as a gift from her father over the last several years. This was Heather only sources of income for the year. Reba had 10,000 of federal income taxes withheld by employer. Heather made 1000 estimates tax payments during the year. Reba did not make any estimate payments. Reba had qualifying insurance for purposes of the affordable care Act (ACA).

Required :

(A) Determine Reba federal income taxes due or taxes payable for current year, complete pages 1 and 2 of forms 1040 for Reba.

(b) is Reba allowed to file as a head of household or single?

(c) Determine the amount of FICA taxes Reba was required to pay on her salary.

(d) Determine Heather federal income taxes due or payable

  

Answer 1