Question

Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $70,000 per year.

Amanda owns an accounting practice as a sole proprietor (it qualifies as a full trade or business). Amanda generates $100,000 of revenues during the year. She has the following business payments associated with her firm:

• Utilities: $2,000
• Office Rent: $15,000
• Self-Employment Tax (hers): $10,000
• Salary for her secretary: $25,000
• Fines/Penalties: $2,500
• State Income Tax (from business): $6,000
• Payroll Taxes (secretary’s): $2,000
• Meals: $1,200
• Payment to officer to let her go from speeding while on her way to a client meeting $100

They also have the following personal expenses during the year:

·      Medical Expenses: $15,500

·      State & Local Taxes (personal): $11,000

·      Federal Income Tax Payments (personal): $10,000

·      Cash Charitable Contributions: $20,000

The standard deduction amounts are listed below:

·      Single: $12,200

·      Head of Household: $18,350

·      Married Filing Jointly: $24,400

Calculate the appropriate amounts for Bruce and Amanda on the following page. Please show your work for maximum points.

Answer 1