Question

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 $1,240 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 $2,090 to move their personal belongings, and she and Heather spent two days driving the 1,442 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 $3,080 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 $5,880 in state income taxes and $12,580 in charitable contributions during the year. She also paid the following medical-related expenses for herself and Heather: Insurance premiums $ 5,875 Medical care expenses $ 1,180 Prescription medicine $ 430 Nonprescription medicine $ 180 New contact lenses for Heather $ 280 Shortly after the move, Reba got distracted while driving and she ran into a street sign. The accident caused $980 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 $2,080 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: $2,280 of interest income from corporate bonds and $1,580 interest income from the City of Denver municipal bonds. Overall, Reba’s stock portfolio appreciated by $12,080 but she did not sell any of her stocks. Heather reported $6,360 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 tax refund or taxes payable for the current year. Use Tax Rate Schedule for reference. (Round percentages to two decimal places. Round your intermediate computations and final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.) Amount Description Gross Income: Salary Alimony received Rental receipts Disability insurance payments Interest income from corporate bonds Interest income from municipal bonds (1) Gross income Deductions for AGI: Expenses for rental property Total for AGI deductions (3) From AGI deductions: Medical expenses State income taxes Charitable contributions Total itemized deductions (5) Standard deduction (2) AGI (6) (7) Taxable income (8) Tax on taxable income (9) Credits (10) Tax prepayments

Answer 1

Particulars I Amount / Explanation Cross Income Salan $38300 Alimmy secoued ($12 40X12] Rental declepts $50000 Gift form mother Disability $832 ( $2070X40% Intexst income $2280 from corporelte Interest from Exempt municipal bonds $0 $91412 Co Gross Income Deduction LAGI estar Rental property. $19500 Moving expenses. $2422 C2090 + $3316 (14424 0 23

(2) Total ACT! 13 AGL Em AGZ 21929 694907 deductions $ 1033 (46245_7-57.646) medical expenses State income ke Charitable conth Casualty loy cledtuchos $5860 $12580 $29493 4 Total i tenused deduction. 1) Standases deduction. $18000 6 Greater of 15or 16 $19993

Ai Taxable in one. $49997 To acon, $57281 2018 zater taxable income (9) Gedit $ 500 (20) Tar payment $10000 Taxrefund. $4772