Question

Camille Sikorski was divorced last year. She currently provides a home for her 15-year-old daughter Kaly. Kaly lived in Camille’s home for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of $107,500 and contributed $6,400 of it to a qualified retirement account (a for AGI deduction). She also received $16,500 of alimony from her former husband. Finally, Camille paid $17,400 of expenditures that qualified as itemized deductions. Use 2018 standard deduction rates.

b.  What would Camille’s taxable income be if she incurred $12,950 of itemized deductions instead of $17,400?

c. Assume the original facts but now suppose Camille’s daughter, Kaly, is 25 years old and a full-time student. Kaly’s gross income for the year was $7,400. Kaly provided $4,440 of her own support, and Camille provided $7,400 of support. What is Camille’s taxable income?

Answer 1

Part B

What would Camille’s taxable income be if she incurred $12,200 of itemized deductions instead of $4,300?

(1) Gross income (107500+16500)........ $124,000

(2) For AGI deductions............................... 6400

(3) Adjusted gross income........................ $117600

(4) Standard deduction.................. ............ 18000

(5) Itemized deductions................................12950

(6) Greater of standard deductions or itemized deductions....................................... .......... ......18000

Taxable income............................ .................... $99600

Part C

(1) Gross income............................... .......... $124000

(2) For AGI deductions..................... ............... 6400

(3) Adjusted gross income...........................$117600

(4) Standard deduction...................................18000

(5) Itemized deduction............................ ........17400

(6) Greater of standard deduction and itemized deduction.......................................................... 18000

Taxable income............................................... 99600

Note: standard deduction 2018 for head of household will apply. Answers in both part would be same. It would have been if personal and dependency exemptions would have been applied but from 2018 personal exemption has been eliminated.