Question

Martin S. Albert (Social Security number 111-11-1111) is 39 years old and is married to Michele R. Albert (Social Security number 123-45-6789). The Alberts live at 512 Ferry Road, Newport News, VA 23601. They file a joint return and have two dependent children, Charlene, age 17, and Jordan, age 18. Charlene’s Social Security number is 123-45-6788, and Jordan’s Social Security number is 123-45-6787. In 2020, Martin and Michele had the following transactions:a.Martin received $120,000 in salary from Red Steel Corporation, where he is a construction engineer. Withholding for Federal income tax was $10,750. The amounts withheld for FICA taxes were as follows: 3$7,049($113,700 6.2%) for Social Security and 3$1,740($120,000 1.45%) for Medicare. Martin worked in Mexico from January 1, 2019, until February 15, 2020. His $120,000 salary for 2020 includes $18,000 he earned for January and one-half of February 2020 while working in Mexico.b.Martin and Michele received $400 interest on Montgomery County (Virginia) school bonds.c.Martin received $2,300 interest from a Bahamian bank account.d.Michele received 50 shares of Applegate Corporation common stock as a stock dividend. The shares had a fair market value of $2,500 at the time Michele received them, and she did not have the option of receiving cash.e.Martin and Michele received a $1,200 refund on their 2019 Virginia income taxes. Their itemized deductions in 2019 totaled $34,000 and included state taxes of $7,400.f.Martin paid $6,600 alimony to his former wife, Rose T. Morgan (Social Security number 123-45-6786). The divorce was finalized in 2016" "Martin S. Albert (Social Security number 111-11-1111) is 39 years old and is married to Michele R. Albert (Social Security number 123-45-6789). The Alberts live at 512 Ferry Road, Newport News, VA 23601. They file a joint return and have two dependent children, Charlene, age 17, and Jordan, age 18. Charlene’s Social Security number is 123-45-6788, and Jordan’s Social Security number is 123-45-6787. In 2020, Martin and Michele had the following transactions:a.Martin received $120,000 in salary from Red Steel Corporation, where he is a construction engineer. Withholding for Federal income tax was $10,750. The amounts withheld for FICA taxes were as follows: 3$7,049($113,700 6.2%) for Social Security and 3$1,740($120,000 1.45%) for Medicare. Martin worked in Mexico from January 1, 2019, until February 15, 2020. His $120,000 salary for 2020 includes $18,000 he earned for January and one-half of February 2020 while working in Mexico.b.Martin and Michele received $400 interest on Montgomery County (Virginia) school bonds.c.Martin received $2,300 interest from a Bahamian bank account.d.Michele received 50 shares of Applegate Corporation common stock as a stock dividend. The shares had a fair market value of $2,500 at the time Michele received them, and she did not have the option of receiving cash.e.Martin and Michele received a $1,200 refund on their 2019 Virginia income taxes. Their itemized deductions in 2019 totaled $34,000 and included state taxes of $7,400.f.Martin paid $6,600 alimony to his former wife, Rose T. Morgan (Social Security number 123-45-6786). The divorce was finalized in 2016"

1)What is the 2020 Adjusted Gross Income for Martin and Michele Albert?

2)What is the 2020 taxable income for Martin and Michele Albert?

3)What is the tax due (refund) for Martin and Michele Albert for 2020?

Answer 1

a.

Adjusted income of Martin and Michele Albert in 2020
Particulars	Value($)
Income from salary	120000
Interest from bank	2300
Interest from bonds	400
Capital gains	125000
	247700
Less
Deduction for medicare	1740
Alimony paid	6600
Adjusted Gross income	239360

b.

Taxable income of Martin and Michele Albert in 2020
Particulars	Value($)
Income from salary	120000
Interest from bank	2300
Interest from bonds	400
Capital gains	125000
	247700
Less
Medicare	1740
Alimony paid	6600
Adjusted gross income of Martin and Michele	239360
Less : Standard deduction	24800
Less : earned tax credit	5920
Taxable income	208640

standard deduction is 24800 as they jointly file returns

c.

Taxable due/refund of Martin and Michele Albert in 2020
Particulars	Value($)
Income from salary	120000
Interest from bank	2300
Interest from bonds	400
Capital gains	125000
	247700
Less
Medicare	1740
Alimony paid	6600
Adjusted gross income of Martin and Michele	239360
Less : Standard deduction	24800
Less : earned Tax credit	5920
Taxable income of Martin and Michele Albert in 2020	208640
Income slabs	Rate	Tax liability
upto $19750	10%	1975
19751-80250	12%	7259.88	60499
80251-171050	22%	19975.78	90799
171051-326600	24%	9021.36	37589
326601-414700	32%
414701-622050	35%
622050 and above	37%
		38232.02
	rounded off	38232
	less : Tax deducted at source	10750
	Tax due	27482