Question

199. If a separation decree says a taxpayer is to pay $2,000 a month in alimony, and he or she pays $2,200 in alimony, what is the amount that is deductible as alimony?

a)$0

b)$1,000

c)$1,100

d)$2,000

196. Camilo is a self-employed roofer. He reported a profit of $30,000 on his Schedule C. He had other taxable income of $5,000. He paid $3,000 for hospitalization insurance. His self-employment tax was $4,656. He paid his former wife $4,000 in court-ordered alimony and $4,000 in child support. What is the amount Camilo can deduct in arriving at adjusted gross income (AGI)?

a)$5,328

b)$9,328

c)$13,656

d)$15,656

192. Marisela has a high deductible health plan (HDHP) for her family all year in 2016. The annual deductible is $5,000. She can contribute up to what amount to her Archer MSA for the year?

a)$0

b)$3,250

c)$3,750

d)$4,200

Answer 1

199. Voluntary payments which are not required as per the divorce or separation instrument are not alimony and does not qualify for the deduction. Hence the amount deductible as alimony is

d) $2000

196. Camilo is a self-employed roofer. He reported a profit of $30,000 on his Schedule C. He had other taxable income of $5,000. He paid $3,000 for hospitalization insurance. His self-employment tax was $4,656. He paid his former wife $4,000 in court-ordered alimony and $4,000 in child support. What is the amount Camilo can deduct in arriving at adjusted gross income (AGI)?

IRA contributions, alimony paid, 50% of self-employment tax, and 100% of self-employed heath insurance premiums are adjustments to income to arrive at Adjusted Gross Income (AGI).

In current scenario, 100% of self health insurance paid, 50% of self employed tax and alimony paid to wife (alimony paid for child support does not qualify for deduction) are adjustments which can be made to arrive at Adjusted Gross income

Substituting the value 100% health insurance paid = 3000 + 50% of self employed tax = 50% of 4656 + alimony of $4000 = 3000+2328+4000 = (b) $9328

192. Marisela has a high deductible health plan (HDHP) for her family all year in 2016. The annual deductible is $5,000. She can contribute up to what amount to her Archer MSA for the year?

She can contribute 75% of the annual deductible of HDHP (it would have been 65% if it was a self-only plan) for Archer MSA which is 75% of $5000 = C. $3750