Question

elaborate over this example:

single taxpayer no dependent, only source of income is collecting rent form his 2 family house. he lives in one floor and he rents the other. he collects 35000 whole year rent, total expenses that include mortgage, real estate taxes, and maintenances are 15000. remember this is considered 50% household income.

provide the name of the forms that needs to use in order to complete this tax return?

provide the actual number that will be shown in the 1040?

provide the taxable income ( total income minus standard deduction)?

Answer 1

Answer:

a.

Forms 1040 and 1040-ES are should have been utilized so as to complete the tax return.

Form 1040 is the standard Internal Revenue Service (IRS) structure that singular citizens or taxpayers use to document their annual income tax returns. The form contains segments that requires citizens to disclose their taxable income for the year to decide if extra taxes are owed or whether the filer will get a tax refund.

Form 1040-ES is utilized to figure and make good on evaluated quarterly taxes. Estimated tax applies to income that isn't liable to retaining or withholding, which incorporates income from self employment, interest, profits or dividends, and leases.

b.

The entire year lease given in the question is $35,000. The costs identified with the leasing are given as $15000. In this way the lease that will be appeared in 1040 is $20,000 ( $35,000-$15,000) .Therefore rental income is $ 20,000.

c.

The Taxable income in the wake of considering a standard deduction of 20% will be determined as below:

Description	Amount	Amount
Rental income	According to b	$ 20,000
Less: Standard deduction @ 20%	= $20,000*20/100 = $4,000	$4,000
Taxable income	$ 20,000 - $4,000 = $ 16,000	$ 16,000