Question

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1112, respectively. Alice's birthday is September 21, 1971, and Bruce's is June 27, 1970. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (employer identification number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (employer identification number 11-1111111).

The following information is shown on their Wage and Tax Statements (Form W-2) for 2018.

Line	Description	Alice	Bruce
1	Wages, tips, other compensation	$58,000	$62,100
2	Federal income tax withheld	4,500	5,300
3	Social Security wages	58,000	62,100
4	Social Security tax withheld	3,596	3,850
5	Medicare wages and tips	58,000	62,100
6	Medicare tax withheld	841	900
15	State	Massachusetts	Massachusetts
16	State wages, tips, etc.	58,000	62,100
17	State income tax withheld	2,950	3,100

The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1994, Social Security number 123-45-6788) and John (born February 7, 1998, Social Security number 123-45-6786). Both children are full-time students and live with the Byrds except when they are away at college. Cynthia earned $6,200 from a summer internship in 2018, and John earned $3,800 from a part-time job.

During 2018, the Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (born March 6, 1942, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $1,600,000 on December 28.

The Byrds had the following expenses relating to their personal residence during 2018:

Property taxes	$5,000
Qualified interest on home mortgage (acquisition indebtedness)	8,700
Repairs to roof	5,750
Utilities	4,100
Fire and theft insurance	1,900

The Byrds had the following medical expenses for 2018:

Medical insurance premiums	$4,500
Doctor bill for Sam incurred in 2017 and not paid until 2018	7,600
Operation for Sam	8,500
Prescription medicines for Sam	900
Hospital expenses for Sam	3,500
Reimbursement from insurance company, received in 2018	3,600

The medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support.

Questions:

1. Calculate the income tax liability

2. Calculate any other taxes due

3. Calculate total tax credits available

4. Calculate total witholding and tax payments

Answer 1

Particulars	Amount $
Bruce Salary	62,100
Alice Salary	58000
Intrest Income	2750
Adjusted gross income	122850
less: Itemised Deductions	(38,536)
Less:Personal & Dependency Exemptions	(13600)
Taxable income	70714
Tax From table	10529
Less:Prepayments and credit	(10800)
Net tax payable	271

Notes & Explanation of itemised deductions:

Particulars	Amount$
Itemised Deductions:
Medical Insurance Premium	4500
Doctor bill Paid	7600
Operation done	8500
Medicine Prescription	900
Hospital Expenses	3500
Total Medical Expenses	25000
Less: Reimbursements	(3600)
7.5% of AGI	(9214)
Deductible Medical Expenses(1)	12186

Taxes:
State Income Tax	6950
Property tax on residence	5000
Total(2)	11950
Intrest on Home Mortgage(3)	8800
Charitable Contributions
Church	5000
Tickets to Charity	250
Cloth Donated	350
Total(4)	5600
Other Itemised Donations:
Uniforms	675
Professional journals	400
Total	1075
Less: 2% of AGI	2457
Other deductions of 2007	-
Total itemised deductions(1+2+3+4)	38536