Question

In June 2018 Phillip and Barbara Jones and their two dependent children, who are both over 17, moved from Chicago to Albuquerque, New Mexico, a distance of 1,327 miles, which they drove in their own car. The children’s names are Roger and Gwen and both will be attending the University of New Mexico in the fall, Roger as a freshman and Gwen as a junior. The move was a result of a civilian job transfer for Phillip. The distance from their old home to Phillip’s old office was 30 miles. Barbara quit her job in Chicago and decided to perform volunteer work for a year before seeking further employment. Phillip and Barbara incurred expenses of $4,550 to the moving company (which included $320 for temporary furniture storage), hotel charges of $550, and meals of $712 en route from Chicago to Albuquerque. Their new home is located at 7432 Desert Springs Way, Albuquerque, NM 87101. Phillip, but not Barbara, was employed in the new location throughout the year. Phillip’s social security number is 412-34-5670 (date of birth 6/12/1976), Barbara’s is 412-34-5671 (date of birth 8/12/1978), Roger’s is 412-34-5672 (date of birth 2/17/2001), and Gwen’s is 412-34-5673 (date of birth 9/14/1999). The Joneses had qualifying health care coverage at all times during the tax year.

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Question: In June 2018 Phillip and Barbara Jones and their two dependent children, who are both over 17, mo...

In June 2018 Phillip and Barbara Jones and their two dependent children, who are both over 17, moved from Chicago to Albuquerque, New Mexico, a distance of 1,327 miles, which they drove in their own car. The children’s names are Roger and Gwen and both will be attending the University of New Mexico in the fall, Roger as a freshman and Gwen as a junior. The move was a result of a civilian job transfer for Phillip. The distance from their old home to Phillip’s old office was 30 miles. Barbara quit her job in Chicago and decided to perform volunteer work for a year before seeking further employment. Phillip and Barbara incurred expenses of $4,550 to the moving company (which included $320 for temporary furniture storage), hotel charges of $550, and meals of $712 en route from Chicago to Albuquerque. Their new home is located at 7432 Desert Springs Way, Albuquerque, NM 87101. Phillip, but not Barbara, was employed in the new location throughout the year. Phillip’s social security number is 412-34-5670 (date of birth 6/12/1976), Barbara’s is 412-34-5671 (date of birth 8/12/1978), Roger’s is 412-34-5672 (date of birth 2/17/2001), and Gwen’s is 412-34-5673 (date of birth 9/14/1999). The Joneses had qualifying health care coverage at all times during the tax year.

Phillip is a civil engineer for a national firm; his W-2 contained the following information:

Wages (box 1)	=	$	110,220.45
Federal W/H (box 2)	=	$	11,015.42
Social security wages (box 3)	=	$	110,220.45
Social security W/H (box 4)	=	$	6,833.67
Medicare wages (box 5)	=	$	110,220.45
Medicare W/H (box 6)	=	$	1,598.20

In addition, both he and Barbara received Forms 1098-E from the federal student loan program. Phillip had student loan interest of $1,050, and Barbara had student loan interest of $750.

Prepare a Form 1040, and a Student Loan Interest Deduction Worksheet for Phillip and Barbara. (List the names of the taxpayers in the order in which they appear in the problem. Do not round intermediate computations. Round your final answers to the nearest whole dollar amount. Input all the values as positive numbers. Instructions can be found on certain cells within the forms.)

Answer 1

1). According to Income tax Act 1961, Generally Every Assessee whose income exceeds 250000 is require to pay tax. But as per Act they had given special benefit to the Senior Citizen and the Super Senior Citizen.

For Senior Citizen they have to pay tax if income exceeds 500000.

Actually if assessee is minor I.e whose age does not exceed 18 years as on the date of Financial year. If any income they received which is required to taxable then such income shall be taxable in the hands of parents and it should to be added in the higher person income .

If age is more than 18 years then it will be taxable in the hands of assessee itself.

According to our problem as on June 2018 it is to be showing as Roger as an Major i.e more than 18 years and Gwen as an Minor.

There fore what ever income received by the assessee i.e Gwen that should be taxable in the hands of parents whose income is more. There fore in this problem assessee Philip income is more it is taxable in the hands of Philip.

And such assessee will get an exemption of 1500 .

Generally any amount or any emoulments received by the assessee assessee from employer it should be taxable in the hands employee except if any special benefits given in the act.

Philip is an civil engineering and working in one firm. Therefore what ever amount received by such assessee from such employer shall be taxable in the hands of employee .

Actually Philip and Barbara is require to file the return. Roger is not require to file the return because his income does not exceed taxable amount. Even Gwen also not require to file the return.

Computation of Form 104 for the assessee for Phillip

Particulars	Amount	Amount
Income from Salary
Wages	110220.45
Federal	11015.42
Social Security Wages	110220.45
Social Security w / h	6833.67
Medical Wages	110220.45
Medicare W/ h	1598.20
Sub Total Income		350108.64
Expenses:
Moving Expenses	4550
Meals	712
Hotel Charges	550
Sub Total Expenses		(5812)
GROSS TOTAL INCOME		344296.64
Deduction		(1050)
NET TAXABLE INCOME		343246.24

​​​​​​There is no Taxable income for the Assessee Barbara. There fore such assessee is not mandatory to file the return. If such assessee wants to fuel the return then they can file the Nil return.

Computation of Student Loan Interest Deduction for both the assessee

Particulars	Phillip	Barbara
Student loan interest deductiin	1050	750
Total	1050	750

Such assessee is required to file the return with in the due date as per income tax act such Assessee requires to file the return.