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Show all computation’s Bob and Brenda Horton, a married couple filing a joint return for 2020. Bob is 61 and Brenda is 60.

Show all computation’s Bob and Brenda Horton, a married couple filing a joint return for 2020. Bob is 61 and Brenda is 60. They have fully supported their son, Charles age 31 (a US citizen) who lived with Bob and Brenda all of 2020. Bob and Brenda fully supported Charles for all of 2020. Charles only source of income was $3,990 from unemployment. The following information relates to Bob and Brenda for 2020: Salary – Bob $80,000 Salary – Brenda 120,000 Interest income (from bank account) 150 Interest Income from State of NY bonds 4,000 Capital Loss on the sale of ZeZ, Inc stock (7,220) Property taxes paid 4,000 State income taxes paid 5,000 Home mortgage interest paid 6,000 Charitable contributions paid 3,000 Federal Withholding 39,000

a. What is the amount of their gross income?

b. What is the amount of their adjusted gross income?

c. What is the amount of their taxable income?

d. What is the amount of their tax liability?

e. What is the amount of their tax due or (refund)?

Solutions

Expert Solution

Given:

Bob $80,000 Salary – Brenda 120,000

Interest income (from bank account) 150

Interest Income from State of NY bonds 4,000

Capital Loss on the sale of ZeZ, Inc stock (7,220)

Property taxes paid 4,000

State income taxes paid 5,000

Home mortgage interest paid 6,000

Charitable contributions paid 3,000

Federal Withholding 39,000

a. Gross Income = Salary+ Interest Income

Gross Income = 80000+120000+150+4000

=204150

Hence Gross Income = 204150

b.Adjusted Gross Income = Gross Income -IRA deduction

= 204150-(Capital Loss+Property Tax paid)

=204150-(7220+4000)

=204150-11220

=192930

Adjusted Gross Income =192930

c.Taxable Income = Adjusted Gross income - Home mortgage interest paid-Charitable contribution paid- Federal Withholding

=192930-6000-3000-39000

=144930

Taxable Income = 144930

d. Tax Liability = as per slab

10%(19400)+12%(78950-19400)+22%(144930-78951)

=10%*19400+12%(59550)+22%(65979)

=1940+7146+14515

=23601

Tax Liability = 23601

e. Tax due = Tax liability - State Income tax paid

=23601-5000

=19601

Tax due = 19601

ekkarill92 answered 2 years ago
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