AFM202 Lecture Notes - Lecture 8: Pension Credit, Glasses, Medical Equipment
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1. If a taxpayer works for two separateemployers, how much in FUTA taxes is each employer responsible toremit in the name of the taxpayer? (Points : 1) Only the first employer isrequired to remit FUTA taxes on the wages earned from the firstjob.
Both employers must remit FUTAtaxes on the first $7,000 in wages they pay to the taxpayer.
The first employer remits 5.4%on the first $7,000 in wages while the second employer remits only.8% on the first $7,000 in wages to equal the 6.2% rate.
The first employer remits FUTAtax on the first $7,000 in wages and the second employer remitsFUTA tax on the next $7,000 in wages.
$500. $800. $1,000. |
Rollovers are permitted only inunusual circumstances. A tax-free rollover can be madefrom a traditional IRA to another traditional IRA. A tax-free rollover can be madefrom a traditional IRA to a Roth IRA. |
Qualified education expensesinclude required tuition, fees, books, supplies, and equipment atan eligible educational institution. Qualified expenses must bereduced by scholarships or other tax-free income. All of the above. |
$1,200. $1,260. $6,300. |
Employees who received over$85,000 compensation in the previous year. Employees who were in the top25% of employees based on compensation. None of the above. |
$1,400. $1,600. $1,650. |
Directly to the authorizeddepository on the same day the Form 941 is mailed. Directly to the InternalRevenue Service when they file Form 941. Directly only if they use theEFTPS form of payment before Form 941 is filed. |
$350 $825. $1,375 |
Federal withholdingtaxes. Unemployment taxes. All of the above. |
Paul and Donna Decker are married taxpayers, ages 44 and 42,respectively, who file a joint return for 2016. The Deckers live at1121 College Avenue, Carmel, IN 46032. Paul is an assistant managerat Carmel Motor Inn, and Donna is a teacher at Carmel ElementarySchool. They present you with Wâ2 forms that reflect the followinginformation:
Paul | Donna | |
Salary | 68,000 | 56,000 |
Federal Tax Withheld | 6,770 | 6,630 |
State Income Tax Withheld | 900 | 800 |
FICA Tax Withheld | 5,202 | 4,284 |
SSN's | 111-11-1111 | 123-45-6789 |
Donna is the custodial parent of two children from a previousmarriage who reside with the Deckers through the school year. Thechildren, Larry and Jane Parker, reside with their father, Bob,during the summer. Relevant information for the childrenfollows:
Larry | Jane | |
Age | 17 | 18 |
SSN's | 123-45-6788 | 123-45-6787 |
Months spent with Deckers | 9 | 9 |
Under the divorce decree, Bob pays child support of $150 permonth per child during the nine months the children live with theDeckers. Bob says that he spends $200 per month per child duringthe three summer months they reside with him. Donna and Paul candocument that they provide $2,000 support per child per year. Thedivorce decree is silent as to which parent can claim theexemptions for the children.
In August, Paul and Donna added a suite to their home to providemore comfortable accommodations for Hannah Snyder (123-45-6786),Donna's mother, who had moved in with them in February 2015 afterthe death of Donna's father. Not wanting to borrow money for thisaddition, Paul sold 300 shares of Acme Corporation stock for $50per share on May 3, 2016, and used the proceeds of $15,000 to coverconstruction costs. The Deckers had purchased the stock on April29, 2011, for $25 per share. They received dividends of $750 on thejointly owned stock a month before the sale.
Hannah, who is 66 years old, received $7,500 in Social Securitybenefits during the year, of which she gave the Deckers $2,000 touse toward household expenses and deposited the remainder in herpersonal savings account. The Deckers determine that they havespent $2,500 of their own money for food, clothing, medicalexpenses, and other items for Hannah. They do not know what therental value of Hannah's suite would be, but they estimate it wouldbe at least $300 per month.
Interest paid during the year included the following:
Home Mortgage Interest (Paid to Carmel Federal Savings &Loan) | 7,890 |
Interest on an automobile loan (paid to Carmel National Bank | 1,660 |
Interest on Citibank Visa Card | 620 |
In July, Paul hit a submerged rock while boating. Fortunately,he was uninjured after being thrown from the boat and landing indeep water. However, the boat, which was uninsured, was destroyed.Paul had paid $25,000 for the boat in June 2015, and its value wasappraised at $18,000 on the date of the accident.
The Deckers paid doctor and hospital bills of $10,700 and werereimbursed $2,000 by their insurance company. They spent $640 forprescription drugs and medicines and $5,904 for premiums on theirhealth insurance policy. They have filed additional claims of$1,200 with their insurance company and have been told they willreceive payment for that amount in January 2017. Included in theamounts paid for doctor and hospital bills were payments of $380for Hannah and $850 for the children. All members of the Deckerfamily had health insurance coverage for all of 2016.
Additional information of potential tax consequence follows:
Real Estate Taxes Paid | 3,850 |
Sales Taxes Paid (per table) | 1,379 |
Contributions to Church | 1,950 |
Appraised Value of Books Donated toPublic Library | 740 |
Paul's Unreimbursed employee expenses to attend hotel | |
Airfare | 340 |
Hotel | 170 |
Meals | 95 |
Registration Fee | 340 |
Refund for state income tax for 2014 | 1,520 |
(Deckers itemized on their 2014 Federal Tax Return) |
Compute net tax payable or refund due for the Deckers for 2016.Ignore the child tax credit in your computations. If the Deckershave overpaid, the amount is to be credited toward their taxes for2017. Please use tax forms for your conputations, you will needforms 1040 and schedules A,B,C, and D.
Check Figures
FORM 1040
AGI $ 133,770
Tax due $68
SCHEDULEA $ 22,520
