Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000, and they sold their home this year. They initially purchased the home three years ago for $200,000 and they sold it for $250,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $16,500 of itemized deductions, and they had $6,250 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. (use the tax rate schedules .) tax return info for 2016
a. What is the Jacksonsâ taxable income, and what is their tax liability or (refund)? (Do not round intermediate calculation. Round "Income tax liability", "Total tax", "Taxes payable or Refund due" to 2 decimal places.)
*****(I HAVE BOLDED THE ANSWERS THAT ARE NOT RIGHT, & THOSE ARE THE ONES I NEED HELP WITH)***
Description Amount (1) Gross income $100,000 (2) For AGI deductions 0 (3) Adjusted gross income $100,000 (4) Standard deduction 12,200 (5) Itemized deductions 16,500 (6) Greater of standard deductions or itemized deductions 16,500 (7) Personal and dependency exemptions 23,400 (8) Total deductions from AGI 39,900 (9) Taxable income $60,100 (10) Income tax liability $8,122.50 (11) Other taxes $0 (12) Total tax $8,122.50 (13) Credits 4,000 (14) Prepayments 6,250 Refund due $2,127.50
Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000, and they sold their home this year. They initially purchased the home three years ago for $200,000 and they sold it for $250,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $16,500 of itemized deductions, and they had $6,250 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. (use the tax rate schedules .) tax return info for 2016
a. What is the Jacksonsâ taxable income, and what is their tax liability or (refund)? (Do not round intermediate calculation. Round "Income tax liability", "Total tax", "Taxes payable or Refund due" to 2 decimal places.)
*****(I HAVE BOLDED THE ANSWERS THAT ARE NOT RIGHT, & THOSE ARE THE ONES I NEED HELP WITH)***
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Related questions
Derek and Meagan Jacoby recently graduated from State Universityand Derek accepted a job in business consulting while Meaganaccepted a job in computer programming. Meagan inherited $75,000from her grandfather who recently passed away. The couple isdebating whether they should buy or rent a home. They located arental home that meets their needs. The monthly rent is $2,250.They also found a three-bedroom home that would cost $475,000 topurchase. The Jacobys could use Meaganâs inheritance for a downpayment on the home. Thus, they would need to borrow $400,000 toacquire the home. They have the option of paying two discountpoints to receive a fixed interest rate of 4.5 percent on the loanor paying no points and receiving a fixed interest rate of 5.75percent for a 30-year fixed loan. |
Though anything could happen, the couple expects to live in thehome for no more than five years before relocating to a differentregion of the country. Derek and Meagan donât have anyschool-related debt, so they will save the $75,000 if they donâtpurchase a home. Also, consider the following information: |
| ⢠| The coupleâs marginal tax rateis 25 percent. |
| ⢠| Regardless of whether they buyor rent, the couple will itemize their deductions. |
| ⢠| If they buy, the Jacobys wouldpurchase and move into the home on January 1, 2014. |
| ⢠| If they buy the home, the property taxes for the year are$3,600. |
| ⢠| Disregard loan-related fees notmentioned above. |
| ⢠| If the couple does not buy a home, they will put their moneyinto their savings account where they earn 5 percent annualinterest. |
| ⢠| Assume that all unstated costsare equal between the buy and rent option. |
| Required: |
| Help the Jacobys with theirdecisions by answering the following questions: |
| a. | If the Jacobys decide to rent the home, what is their after-taxcost of the rental for the first year (include income from thesavings account in your analysis)? (Round your intermediateand final answer to the nearest whole dollar amount.) |
After-tax cost?____
| b. | What is the approximate break-even point in years for paying thepoints to receive a reduced interest rate (to simplify thiscomputation, assume the Jacobys will make interest-only payments,and ignore the time value of money)? (Round your answer to1 decimal place.) |
Break even point in years?________
| c. | What is the after-tax cost (in interest and property taxes) ofliving in the home for 2014? Assume that the Jacobys' interest rateis 5.75 percent, they do not pay discount points, they makeinterest-only payments for the first year, and the value of thehome does not change during the year. |
After tax cost?________
| d. | Assume that on March 1, 2014, the Jacobys sold their home for$525,000, so that Derek and Meagan could accept job opportunitiesin a different state. The Jacobys used the sale proceeds to (1) payoff the $400,000 principal of the mortgage, (2) pay a $10,000commission to their real estate broker, and (3) make a down paymenton a new home in the different state. However, the new home costonly $300,000. (Round your intermediate and final answersto the nearest whole dollar amount.) |
| d-1. | What gain or loss do the Jacobys realize and recognize on thesale of their home (assume they make interest only payments on theloan)? |
Realized gain (loss)?______
Recognized gain (loss)?________
| d-2. | What amount of taxes must they pay on the gain, if any? |
Taxes payable on gain?________
| e. | Assume the same facts as in part (d), except that the Jacobyssell their home for $450,000 and they pay a $7,500 commission. Whateffect does the sale have on their 2014 income tax liability?Recall that the Jacobys are subject to an ordinary marginal taxrate of 25 percent and assume that they do not have any othertransactions involving capital assets in 2014. |
Effect of loss on Jacoby's tax liability?______
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
