Question

Brett and Lisa file taxes under the married filing jointly status. Lisa is a sales manager for an auto parts company and Brett takes care of their 3 children. In 2018, Lisa receives a promotion associated with a move to a new division located over 500 miles from their existing home. The cost to move their household items is $8,700. Lisa's employer reimburses her for $3,000 of those costs and also pays $2,100 for airfare for the entire family to fly to the new destination. Lisa's moving expenses deduction for 2018 is:

a.$5,700

b.$3,600

c.$0

d.$8,700

e.None of these choices are correct.

Ellen supports her family as a self-employed attorney. She reports $90,000 of income on her Schedule C and pays $8,000 for health insurance for her family, $2,500 for dental insurance, $4,000 for health insurance for her 23-year-old daughter who is no longer a dependent, and $3,000 for disability insurance for herself. What is Ellen's self-employed health insurance deduction?

a.$10,500

b.$12,000

c.$13,500

d.$14,500

e.$8,000

Over the years, Monica contributed $15,000 to a Roth IRA opened 10 years ago. The IRA has a current value of $37,500. She is 54 years old and takes a distribution of $25,000. How much of the distribution will be taxable to Monica?

a.$10,000

b.$0

c.$37,500

d.$15,000

e.$25,000

Jody is a physician (not covered by a retirement plan) with a salary of $40,000 from the hospital where she is employed. She supports her husband, Andre, who sells art work and has no earned income. Both are in their twenties. What is the maximum total amount that Jody and Andre may contribute to their IRAs and deduct for the 2018 tax year?

a.$5,000

b.$5,500

c.$11,000

d.$10,000

e.None of these choices are correct.

Answer 1

Part A)
Answer: c) 0

Only members of Armed Forces are allowed deduction on moving expenses for tax years 2018 through 2025 as per the latest notification of IRS through Publication 521. Here, it is clearly mentioned that none of them work in the armed forces. Notably, the cost to move household items, "personal effects", travel expenses, members of your household are tax deductible expenses.

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Part B)
Answer: d) $14,500

If you are self employed, the amount of insurance paid is tax deductible.
Even if the daughter is dependent but her age is less than 28 year, the insurance premium for her would also be covered. However, disability would not be covered.
Total medical expenses are = $8000 + $2500 + $4000 = $14500

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Part C)
Answer: a) $10,000

No additional penalty`will be charged on withdrawal since its been more than 5 years. Also, if she was more than 59.5 years of age, entire withdrawal would have been tax free.

Distribution Amount - Contribution = $25000 - $15000 =$10000
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Part D)
Answer: c) $11,000

$5500 is allowed as tax deductible for investment in IRA for each person as an annual contribution limit. Notably, its $6500 per person if you are 60 or older.
Thus, total tax deductible for Jody and Andre would be $11,000.