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In: Accounting
Shown below are exchange rates for several currencies.
| US$ per 1 euro | US$ per 1 franc | Mexican peso per US$1 | |
| Spot rate | 1.21 | 1.03 | 19.68 |
| 30-day forward rate | 1.19 | 1.06 | 20.15 |
| 60-day forward rate | 1.15 | 1.07 | 21.28 |
A U.S. company purchases goods from several foreign companies with payment due in euros, francs, and pesos. Would the company be better off paying any of the suppliers now or should it wait 60 days? Why?
In: Finance
1. Mumbai Ltd. is an Indian company; they are in the process of raising a US dollar loan and are negotiating rates with City Bank. The Company has been offered a fixed rate of 7% p.a with a proviso that should they opt for a floating rate, the interest rate is likely to be linked to the benchmark rate of 60 basis points over the 10 years US T Bill Rate, with interest reification on a three-monthly basis. The expectations of Mumbai Ltd. are that the dollar interest rates will fall, and are inclined to have a flexible mechanism built into their interest rates. On enquiry they find that they could go for swap arrangement with Chennai India Ltd. who have been offered a floating rate of 120 basis points over 10 year US T Bill Rate, as against a fixed rate of 8.20%.
Describe the swap on the assumption that the swap differential is shared between Mumbai Ltd. and Chennai India Ltd. in the proportion of 2: 1.
The answer should be a min of 700 words with complete theory and calculation part
In: Finance
Reba Dixon is a fifth-grade school teacher who earned a salary
of $38,200 in 2018. She is 45 years old and has been divorced for
four years. She receives $1,295 of alimony payments each month from
her former husband (divorced in 2016). Reba also rents out a small
apartment building. This year Reba received $50,500 of rental
payments from tenants and she incurred $19,695 of expenses
associated with the rental.
Reba and her daughter Heather (20 years old at the end of the year)
moved to Georgia in January of this year. Reba provides more than
one-half of Heather’s support. They had been living in Colorado for
the past 15 years, but ever since her divorce, Reba has been
wanting to move back to Georgia to be closer to her family.
Luckily, last December, a teaching position opened up and Reba and
Heather decided to make the move. Reba paid a moving company $2,200
to move their personal belongings, and she and Heather spent two
days driving the 1,464 miles to Georgia.
Reba rented a home in Georgia. Heather decided to continue living
at home with her mom, but she started attending school full-time in
January at a nearby university. She was awarded a $3,190 partial
tuition scholarship this year, and Reba helped out by paying the
remaining $690 tuition cost. If possible, Reba thought it would be
best to claim the education credit for these expenses.
Reba wasn't sure if she would have enough items to help her benefit
from itemizing on her tax return. However, she kept track of
several expenses this year that she thought might qualify if she
was able to itemize. Reba paid $5,990 in state income taxes and
$12,690 in charitable contributions during the year. She also paid
the following medical-related expenses for herself and Heather:
| Insurance premiums | $ | 5,985 |
| Medical care expenses | $ | 1,290 |
| Prescription medicine | $ | 350 |
| Nonprescription medicine | $ | 290 |
| New contact lenses for Heather | $ | 390 |
Shortly after the move, Reba got distracted while driving and
she ran into a street sign. The accident caused $1,090 in damage to
the car and gave her whiplash. Because the repairs were less than
her insurance deductible, she paid the entire cost of the repairs.
Reba wasn’t able to work for two months after the accident.
Fortunately, she received $2,190 from her disability insurance. Her
employer, the Central Georgia School District, paid 60% of the
premiums on the policy as a nontaxable fringe benefit and Reba paid
the remaining 40% portion.
A few years ago, Reba acquired several investments with her portion
of the divorce settlement. This year she reported the following
income from her investments: $2,390 of interest income from
corporate bonds and $1,690 interest income from the City of Denver
municipal bonds. Overall, Reba’s stock portfolio appreciated by
$12,190 but she did not sell any of her stocks.
Heather reported $6,580 of interest income from corporate bonds she
received as gifts from her father over the last several years. This
was Heather’s only source of income for the year.
Reba had $10,000 of federal income taxes withheld by her employer.
Heather made $1,000 of estimated tax payments during the year. Reba
did not make any estimated payments. Reba had qualifying insurance
for purposes of the Affordable Care Act (ACA).
a. Determine Reba’s federal income taxes due or taxes payable for the current year. Use Tax Rate Schedule for reference. (Round your intermediate computations and final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)
b. Is Reba allowed to file as a head of household or single?
c. Determine the amount of FICA taxes Reba was required to pay on her salary. (Round your final answer to the nearest whole dollar amount.)
d. Determine Heather’s federal income taxes due or payable. Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates, Estates and Trusts for reference. (Round your intermediate computations and final answer to the nearest whole dollar amount.)
In: Accounting
Reba Dixon is a
fifth-grade school teacher who earned a salary of $38,000 in 2018.
She is 45 years old and has been divorced for four years. She
receives $1,200 of alimony payments each month from her former
husband (divorced in 2016). Reba also rents out a small apartment
building. This year Reba received $50,000 of rental payments from
tenants and she incurred $19,500 of expenses associated with the
rental.
Reba and her daughter Heather (20 years old at the end of the year)
moved to Georgia in January of this year. Reba provides more than
one-half of Heather’s support. They had been living in Colorado for
the past 15 years, but ever since her divorce, Reba has been
wanting to move back to Georgia to be closer to her family.
Luckily, last December, a teaching position opened up and Reba and
Heather decided to make the move. Reba paid a moving company $2,010
to move their personal belongings, and she and Heather spent two
days driving the 1,426 miles to Georgia.
Reba rented a home in Georgia. Heather decided to continue living
at home with her mom, but she started attending school full-time in
January at a nearby university. She was awarded a $3,000 partial
tuition scholarship this year, and Reba helped out by paying the
remaining $500 tuition cost. If possible, Reba thought it would be
best to claim the education credit for these expenses.
Reba wasn't sure if she would have enough items to help her benefit
from itemizing on her tax return. However, she kept track of
several expenses this year that she thought might qualify if she
was able to itemize. Reba paid $5,800 in state income taxes and
$12,500 in charitable contributions during the year. She also paid
the following medical-related expenses for herself and Heather:
| Insurance premiums | $ | 5,795 |
| Medical care expenses | $ | 1,100 |
| Prescription medicine | $ | 350 |
| Nonprescription medicine | $ | 100 |
| New contact lenses for Heather | $ | 200 |
Shortly after the
move, Reba got distracted while driving and she ran into a street
sign. The accident caused $900 in damage to the car and gave her
whiplash. Because the repairs were less than her insurance
deductible, she paid the entire cost of the repairs. Reba wasn’t
able to work for two months after the accident. Fortunately, she
received $2,000 from her disability insurance. Her employer, the
Central Georgia School District, paid 60% of the premiums on the
policy as a nontaxable fringe benefit and Reba paid the remaining
40% portion.
A few years ago, Reba acquired several investments with her portion
of the divorce settlement. This year she reported the following
income from her investments: $2,200 of interest income from
corporate bonds and $1,500 interest income from City of Denver
municipal bonds. Overall, Reba’s stock portfolio appreciated by
$12,000 but she did not sell any of her stocks.
Heather reported $6,200 of interest income from corporate bonds she
received as gifts from her father over the last several years. This
was Heather’s only source of income for the year.
Reba had $10,000 of federal income taxes withheld by her employer.
Heather made $1,000 of estimated tax payments during the year. Reba
did not make any estimated payments. Reba had qualifying insurance
for purposes of the Affordable Care Act (ACA).
a. Determine Reba’s federal income taxes due or taxes payable for the current year. Use Tax Rate Schedule for reference. (Round your intermediate computations and final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)
In: Accounting
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,400 in 2018. She is 45 years old and has been divorced for four years. She receives $1,235 of alimony payments each month from her former husband (divorced in 2016). Reba also rents out a small apartment building. This year Reba received $50,400 of rental payments from tenants and she incurred $19,656 of expenses associated with the rental.
Reba and her daughter Heather (20 years old at the end of the year) moved to Georgia in January of this year. Reba provides more than one-half of Heather’s support. They had been living in Colorado for the past 15 years, but ever since her divorce, Reba has been wanting to move back to Georgia to be closer to her family. Luckily, last December, a teaching position opened up and Reba and Heather decided to make the move. Reba paid a moving company $2,080 to move their personal belongings, and she and Heather spent two days driving the 1,440 miles to Georgia.
Reba rented a home in Georgia. Heather decided to continue living at home with her mom, but she started attending school full-time in January at a nearby university. She was awarded a $3,070 partial tuition scholarship this year, and Reba helped out by paying the remaining $570 tuition cost. If possible, Reba thought it would be best to claim the education credit for these expenses.
Reba wasn't sure if she would have enough items to help her benefit from itemizing on her tax return. However, she kept track of several expenses this year that she thought might qualify if she was able to itemize. Reba paid $5,870 in state income taxes and $12,570 in charitable contributions during the year. She also paid the following medical-related expenses for herself and Heather:
Insurance premiums $ 5,865
Medical care expenses $ 1,170
Prescription medicine $ 350
Nonprescription medicine $ 170
New contact lenses for Heather $ 270
Shortly after the move, Reba got distracted while driving and she ran into a street sign. The accident caused $970 in damage to the car and gave her whiplash. Because the repairs were less than her insurance deductible, she paid the entire cost of the repairs. Reba wasn’t able to work for two months after the accident. Fortunately, she received $2,070 from her disability insurance. Her employer, the Central Georgia School District, paid 60% of the premiums on the policy as a nontaxable fringe benefit and Reba paid the remaining 40% portion.
A few years ago, Reba acquired several investments with her portion of the divorce settlement. This year she reported the following income from her investments: $2,270 of interest income from corporate bonds and $1,570 interest income from the City of Denver municipal bonds. Overall, Reba’s stock portfolio appreciated by $12,070 but she did not sell any of her stocks.
Heather reported $6,340 of interest income from corporate bonds she received as gifts from her father over the last several years. This was Heather’s only source of income for the year.
Reba had $10,000 of federal income taxes withheld by her employer. Heather made $1,000 of estimated tax payments during the year. Reba did not make any estimated payments. Reba had qualifying insurance for purposes of the Affordable Care Act (ACA).
Is Reba allowed to file as a head of household or single?
b Determine the amount of FICA taxes Reba was required to
pay on her salary. (Round your final answer to the nearest whole
dollar amount.)
c Determine Heather’s federal income taxes due or payable.
Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates,
Estates and Trusts for reference. (Round your
intermediate
d computations and final answer to the nearest whole dollar amount.)
In: Accounting
Reba Dixon is a fifth-grade school teacher who earned a salary of
$38,300 in 2018. She is 45 years old and has been divorced for four
years. She receives $1,255 of alimony payments each month from her
former husband (divorced in 2016). Reba also rents out a small
apartment building. This year Reba received $50,400 of rental
payments from tenants and she incurred $19,656 of expenses
associated with the rental.
Reba and her daughter Heather (20 years old at the end of the year)
moved to Georgia in January of this year. Reba provides more than
one-half of Heather’s support. They had been living in Colorado for
the past 15 years, but ever since her divorce, Reba has been
wanting to move back to Georgia to be closer to her family.
Luckily, last December, a teaching position opened up and Reba and
Heather decided to make the move. Reba paid a moving company $2,120
to move their personal belongings, and she and Heather spent two
days driving the 1,448 miles to Georgia.
Reba rented a home in Georgia. Heather decided to continue living
at home with her mom, but she started attending school full-time in
January at a nearby university. She was awarded a $3,110 partial
tuition scholarship this year, and Reba helped out by paying the
remaining $500 tuition cost. If possible, Reba thought it would be
best to claim the education credit for these expenses.
Reba wasn't sure if she would have enough items to help her benefit
from itemizing on her tax return. However, she kept track of
several expenses this year that she thought might qualify if she
was able to itemize. Reba paid $5,910 in state income taxes and
$12,610 in charitable contributions during the year. She also paid
the following medical-related expenses for herself and Heather:
| Insurance premiums | $ | 5,905 |
| Medical care expenses | $ | 1,210 |
| Prescription medicine | $ | 460 |
| Nonprescription medicine | $ | 210 |
| New contact lenses for Heather | $ | 310 |
Shortly after the move, Reba got distracted while driving and
she ran into a street sign. The accident caused $1,010 in damage to
the car and gave her whiplash. Because the repairs were less than
her insurance deductible, she paid the entire cost of the repairs.
Reba wasn’t able to work for two months after the accident.
Fortunately, she received $2,110 from her disability insurance. Her
employer, the Central Georgia School District, paid 60% of the
premiums on the policy as a nontaxable fringe benefit and Reba paid
the remaining 40% portion.
A few years ago, Reba acquired several investments with her portion
of the divorce settlement. This year she reported the following
income from her investments: $2,310 of interest income from
corporate bonds and $1,610 interest income from the City of Denver
municipal bonds. Overall, Reba’s stock portfolio appreciated by
$12,110 but she did not sell any of her stocks.
Heather reported $6,420 of interest income from corporate bonds she
received as gifts from her father over the last several years. This
was Heather’s only source of income for the year.
Reba had $10,000 of federal income taxes withheld by her employer.
Heather made $1,000 of estimated tax payments during the year. Reba
did not make any estimated payments. Reba had qualifying insurance
for purposes of the Affordable Care Act (ACA).
Required:
Is Reba allowed to file as a head of household or single?
Determine the amount of FICA taxes Reba was required to pay on her salary. (Round your final answer to the nearest whole dollar amount.)
Determine Heather’s federal income taxes due or payable. Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates, Estates and Trusts for reference. (Round your intermediate computations and final answer to the nearest whole dollar amount.)
In: Accounting
Reba Dixon is a fifth-grade school teacher who earned a salary
of $38,000 in 2020. She is 45 years old and has been divorced for
four years. She receives $1,200 of alimony payments each month from
her former husband (divorced on 12/31/2016). Reba also rents out a
small apartment building. This year Reba received $50,000 of rental
payments from tenants and she incurred $19,500 of expenses
associated with the rental.
Reba and her daughter Heather (20 years old at the end of the year)
moved to Georgia in January of this year. Reba provides more than
one-half of Heather’s support. They had been living in Colorado for
the past 15 years, but ever since her divorce, Reba has been
wanting to move back to Georgia to be closer to her family.
Luckily, last December, a teaching position opened up and Reba and
Heather decided to make the move. Reba paid a moving company $2,010
to move their personal belongings, and she and Heather spent two
days driving the 1,426 miles to Georgia.
Reba rented a home in Georgia. Heather decided to continue living
at home with her mom, but she started attending school full-time in
January and throughout the rest of the year at a nearby university.
She was awarded a $3,000 partial tuition scholarship this year, and
Reba helped out by paying the remaining $500 tuition cost. If
possible, Reba thought it would be best to claim the education
credit for these expenses.
Reba wasn't sure if she would have enough items to help her benefit
from itemizing on her tax return. However, she kept track of
several expenses this year that she thought might qualify if she
was able to itemize. Reba paid $5,800 in state income taxes and
$12,500 in charitable contributions during the year. She also paid
the following medical-related expenses for herself and Heather:
| Insurance premiums | $ | 7,952 |
| Medical care expenses | $ | 1,100 |
| Prescription medicine | $ | 350 |
| Nonprescription medicine | $ | 100 |
| New contact lenses for Heather | $ | 200 |
Shortly after the move, Reba got distracted while driving and
she ran into a street sign. The accident caused $900 in damage to
the car and gave her whiplash. Because the repairs were less than
her insurance deductible, she paid the entire cost of the repairs.
Reba wasn’t able to work for two months after the accident.
Fortunately, she received $2,000 from her disability insurance. Her
employer, the Central Georgia School District, paid 60 percent of
the premiums on the policy as a nontaxable fringe benefit and Reba
paid the remaining 40 percent portion.
A few years ago, Reba acquired several investments with her portion
of the divorce settlement. This year she reported the following
income from her investments: $2,200 of interest income from
corporate bonds and $1,500 interest income from City of Denver
municipal bonds. Overall, Reba’s stock portfolio appreciated by
$12,000, but she did not sell any of her stocks.
Heather reported $6,200 of interest income from corporate bonds she
received as gifts from her father over the last several years. This
was Heather’s only source of income for the year.
Reba had $10,000 of federal income taxes withheld by her employer.
Heather made $1,000 of estimated tax payments during the year. Reba
did not make any estimated payments. Reba had qualifying insurance
for purposes of the Affordable Care Act (ACA).
Comprehensive Problem 8-84 Part a-1
a. Determine Reba’s federal income taxes due or taxes payable for the current year. Use Tax Rate Schedule for reference. (Do not round intermediate values. Round your final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)
2020 Tax Rate Schedules
Individuals
Schedule X-Single
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 9,875 | 10% of taxable income |
| $ 9,875 | $ 40,125 | $987.50 plus 12% of the excess over $9,875 |
| $ 40,125 | $ 85,525 | $4,617.50 plus 22% of the excess over $40,125 |
| $ 85,525 | $163,300 | $14,605.50 plus 24% of the excess over $85,525 |
| $163,300 | $207,350 | $33,271.50 plus 32% of the excess over $163,300 |
| $207,350 | $518,400 | $47,367.50 plus 35% of the excess over $207,350 |
| $518,400 | — | $156,235 plus 37% of the excess over $518,400 |
Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 19,750 | 10% of taxable income |
| $ 19,750 | $ 80,250 | $1,975 plus 12% of the excess over $19,750 |
| $ 80,250 | $171,050 | $9,235 plus 22% of the excess over $80,250 |
| $171,050 | $326,600 | $29,211 plus 24% of the excess over $171,050 |
| $326,600 | $414,700 | $66,543 plus 32% of the excess over $326,600 |
| $414,700 | $622,050 | $94,735 plus 35% of the excess over $414,700 |
| $622,050 | — | $167,307.50 plus 37% of the excess over $622,050 |
Schedule Z-Head of Household
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 14,100 | 10% of taxable income |
| $ 14,100 | $ 53,700 | $1,410 plus 12% of the excess over $14,100 |
| $ 53,700 | $ 85,500 | $6,162 plus 22% of the excess over $53,700 |
| $ 85,500 | $163,300 | $13,158 plus 24% of the excess over $85,500 |
| $163,300 | $207,350 | $31,830 plus 32% of the excess over $163,300 |
| $207,350 | $518,400 | $45,926 plus 35% of the excess over $207,350 |
| $518,400 | — | $154,793.50 plus 37% of the excess over $518,400 |
Schedule Y-2-Married Filing Separately
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 9,875 | 10% of taxable income |
| $ 9,875 | $ 40,125 | $987.50 plus 12% of the excess over $9,875 |
| $ 40,125 | $ 85,525 | $4,617.50 plus 22% of the excess over $40,125 |
| $ 85,525 | $163,300 | $14,605.50 plus 24% of the excess over $85,525 |
| $163,300 | $207,350 | $33,271.50 plus 32% of the excess over $163,300 |
| $207,350 | $311,025 | $47,367.50 plus 35% of the excess over $207,350 |
| $311,025 | — | $83,653.75 plus 37% of the excess over $311,025 |
In: Accounting
Reba Dixon is a fifth-grade school teacher who earned a salary
of $38,000 in 2020. She is 45 years old and has been divorced for
four years. She receives $1,200 of alimony payments each month from
her former husband (divorced in 2016). Reba also rents out a small
apartment building. This year Reba received $50,000 of rental
payments from tenants and she incurred $19,500 of expenses
associated with the rental.
Reba and her daughter Heather (20 years old at the end of the year)
moved to Georgia in January of this year. Reba provides more than
one-half of Heather’s support. They had been living in Colorado for
the past 15 years, but ever since her divorce, Reba has been
wanting to move back to Georgia to be closer to her family.
Luckily, last December, a teaching position opened up and Reba and
Heather decided to make the move. Reba paid a moving company $2,250
to move their personal belongings, and she and Heather spent two
days driving the 1,600 miles to Georgia.
Reba rented a home in Georgia. Heather decided to continue living
at home with her mom, but she started attending school full time in
January and throughout the rest of the year at a nearby university.
She was awarded a $3,360 partial tuition scholarship this year, and
Reba helped out by paying the remaining $500 tuition cost. If
possible, Reba thought it would be best to claim the education
credit for these expenses.
Reba wasn't sure if she would have enough items to help her benefit
from itemizing on her tax return. However, she kept track of
several expenses this year that she thought might qualify if she
was able to itemize. Reba paid $6,520 in state income taxes and
$14,100 in charitable contributions during the year. She also paid
the following medical-related expenses for herself and Heather:
| Insurance premiums | $ | 8,960 |
| Medical care expenses | $ | 1,100 |
| Prescription medicine | $ | 470 |
| Nonprescription medicine | $ | 100 |
| New contact lenses for Heather | $ | 200 |
Shortly after the move, Reba got distracted while driving and
she ran into a street sign. The accident caused $1,020 in damage to
the car and gave her whiplash. Because the repairs were less than
her insurance deductible, she paid the entire cost of the repairs.
Reba wasn’t able to work for two months after the accident.
Fortunately, she received $2,000 from her disability insurance. Her
employer, the Central Georgia School District, paid 60 percent of
the premiums on the policy as a nontaxable fringe benefit and Reba
paid the remaining 40 percent portion.
A few years ago, Reba acquired several investments with her portion
of the divorce settlement. This year she reported the following
income from her investments: $2,200 of interest income from
corporate bonds and $1,740 interest income from City of Denver
municipal bonds. Overall, Reba’s stock portfolio appreciated by
$13,510, but she did not sell any of her stocks.
Heather reported $6,400 of interest income from corporate bonds she
received as gifts from her father over the last several years. This
was Heather’s only source of income for the year.
Reba had $11,270 of federal income taxes withheld by her employer.
Heather made $1,120 of estimated tax payments during the year. Reba
did not make any estimated payments. Reba had qualifying insurance
for purposes of the Affordable Care Act (ACA).
a. Determine Reba’s federal income taxes due or taxes payable for the current year. Use Tax Rate Schedule for reference. (Do not round intermediate values. Leave no answer blank. Enter zero if applicable.)
2020 Tax Rate Schedules
Individuals
Schedule X-Single
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 9,875 | 10% of taxable income |
| $ 9,875 | $ 40,125 | $987.50 plus 12% of the excess over $9,875 |
| $ 40,125 | $ 85,525 | $4,617.50 plus 22% of the excess over $40,125 |
| $ 85,525 | $163,300 | $14,605.50 plus 24% of the excess over $85,525 |
| $163,300 | $207,350 | $33,271.50 plus 32% of the excess over $163,300 |
| $207,350 | $518,400 | $47,367.50 plus 35% of the excess over $207,350 |
| $518,400 | — | $156,235 plus 37% of the excess over $518,400 |
Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 19,750 | 10% of taxable income |
| $ 19,750 | $ 80,250 | $1,975 plus 12% of the excess over $19,750 |
| $ 80,250 | $171,050 | $9,235 plus 22% of the excess over $80,250 |
| $171,050 | $326,600 | $29,211 plus 24% of the excess over $171,050 |
| $326,600 | $414,700 | $66,543 plus 32% of the excess over $326,600 |
| $414,700 | $622,050 | $94,735 plus 35% of the excess over $414,700 |
| $622,050 | — | $167,307.50 plus 37% of the excess over $622,050 |
Schedule Z-Head of Household
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 14,100 | 10% of taxable income |
| $ 14,100 | $ 53,700 | $1,410 plus 12% of the excess over $14,100 |
| $ 53,700 | $ 85,500 | $6,162 plus 22% of the excess over $53,700 |
| $ 85,500 | $163,300 | $13,158 plus 24% of the excess over $85,500 |
| $163,300 | $207,350 | $31,830 plus 32% of the excess over $163,300 |
| $207,350 | $518,400 | $45,926 plus 35% of the excess over $207,350 |
| $518,400 | — | $154,793.50 plus 37% of the excess over $518,400 |
Schedule Y-2-Married Filing Separately
| If taxable income is over: | But not over: | The tax is: |
|---|---|---|
| $ 0 | $ 9,875 | 10% of taxable income |
| $ 9,875 | $ 40,125 | $987.50 plus 12% of the excess over $9,875 |
| $ 40,125 | $ 85,525 | $4,617.50 plus 22% of the excess over $40,125 |
| $ 85,525 | $163,300 | $14,605.50 plus 24% of the excess over $85,525 |
| $163,300 | $207,350 | $33,271.50 plus 32% of the excess over $163,300 |
| $207,350 | $311,025 | $47,367.50 plus 35% of the excess over $207,350 |
| $311,025 | — | $83,653.75 plus 37% of the excess over $311,025 |
In: Accounting
Reba Dixon is a fifth-grade school teacher who earned a salary
of $38,300 in 2019. She is 45 years old and has been divorced for
four years. She receives $1,230 of alimony payments each month from
her former husband (divorced in 2016). Reba also rents out a small
apartment building. This year Reba received $50,500 of rental
payments from tenants and she incurred $19,695 of expenses
associated with the rental.
Reba and her daughter Heather (20 years old at the end of the year)
moved to Georgia in January of this year. Reba provides more than
one-half of Heather’s support. They had been living in Colorado for
the past 15 years, but ever since her divorce, Reba has been
wanting to move back to Georgia to be closer to her family.
Luckily, last December, a teaching position opened up and Reba and
Heather decided to make the move. Reba paid a moving company $2,070
to move their personal belongings, and she and Heather spent two
days driving the 1,438 miles to Georgia.
Reba rented a home in Georgia. Heather decided to continue living
at home with her mom, but she started attending school full-time in
January and throughout the rest of the year at a nearby university.
She was awarded a $3,060 partial tuition scholarship this year, and
Reba helped out by paying the remaining $500 tuition cost. If
possible, Reba thought it would be best to claim the education
credit for these expenses.
Reba wasn't sure if she would have enough items to help her benefit
from itemizing on her tax return. However, she kept track of
several expenses this year that she thought might qualify if she
was able to itemize. Reba paid $5,860 in state income taxes and
$12,560 in charitable contributions during the year. She paid the
following medical expenses:
| Insurance premiums | $8012 |
| medical care expenses | $1160 |
| prescription medicine | $410 |
| non prescription medicine | $160 |
| new contact lenses for heather | $260 |
Shortly after the move, Reba got distracted while driving and
she ran into a street sign. The accident caused $960 in damage to
the car and gave her whiplash. Because the repairs were less than
her insurance deductible, she paid the entire cost of the repairs.
Reba wasn’t able to work for two months after the accident.
Fortunately, she received $2,060 from her disability insurance. Her
employer, the Central Georgia School District, paid 60% of the
premiums on the policy as a nontaxable fringe benefit and Reba paid
the remaining 40% portion.
A few years ago, Reba acquired several investments with her portion
of the divorce settlement. This year she reported the following
income from her investments: $2,260 of interest income from
corporate bonds and $1,560 interest income from City of Denver
municipal bonds. Overall, Reba’s stock portfolio appreciated by
$12,060 but she did not sell any of her stocks.
Heather reported $6,320 of interest income from corporate bonds she
received as gifts from her father over the last several years. This
was Heather’s only source of income for the year.
Reba had $10,000 of federal income taxes withheld by her employer.
Heather made $1,000 of estimated tax payments during the year. Reba
did not make any estimated payments. Reba had qualifying insurance
for purposes of the Affordable Care Act (ACA).
(A) Determine Reba’s federal income taxes due or taxes payable for the current year
(B) Determine the amount of FICA taxes Reba was required to pay on her salary.
(C) Determine Heather’s federal income taxes due or payable.
In: Accounting