Question

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 also paid the following medical-related expenses for herself and Heather:

Insurance premiums	$	8,012
Medical care expenses	$	1,160
Prescription medicine	$	410
Nonprescription 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. 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.)

Help me finish please

Description Amount Gross Income: $ Salary 38,300 14,760 Alimony received Rental receipts 50,500 Disability insurance payments 1,236 Interest income from corporate bonds 2,260 $ Interest income from municipal bonds Gross income Deductions for AG!: Expenses for rental property Total for AGI deductions (1) $ 107,056 19,695 (2) 19,695 AGI 87,361 (3) $ From AGI deductions: Medical expenses State income taxes 5,860 Charitable contributions Total itemized deductions Standard deduction Greater of itemized deductions or standard deduction Taxable income Tax on taxable income 12,560 (4) (5) $ 18,350 (6) (7) (8) (9) Credits (10) Tax prepayments Tax refund $ 10,000

Answer 1

Hi

Required answers are highlighted in yellow: As per Tax year 2019 limit, answer will be different for different year: Solution: Description AGI: $87,361. Single or HOH: Particulars a) Amount 2019 Explanation Gross Income: Salary Alimony received Rental receipts Disability insurance payments Interest income from corporate bonds Interest income from municipal bonds 38,300 1) AOC before phase out 500 (500*100%) 14,760 2) AGI 87,361 3) Phaseout threshold begins 50,500 80000 (2000 60%) 7361 (2-3) 10000 (90000-80000) 74% (4/5) 1,236 4) Excess AGI 2,260 5) Phaseout range 6) Phaseout percentage 0 Gross income 107056 368.05 (1*6) 7) Phaseout amount American Op. Credit after phaseout $ 132 (1-7) Deductions for AGI: Expenses for rental property Total for AGI deductions 19,695 19,695 3 AGI 87,361 From AGI deductions: Medical expenses (8012+1160+410+260) - ( 87361* 10%) State income taxes Charitable contributions 1106 5,860 12,560 Total itemized deductions 19,526 5 Standard deduction 18,350 6 Greater of itemized deductions or standard deduction 19,526 67,835 9,362 7 Taxable income (87361-21470) 8 Tax on taxable income (6065)+(67835-52850) 22% 9 Credits 632 Sign can be +/ 10,000 (500 for other dependents +132 AOTC) 10 Tax prepayments 0.37 Tax Refund -1,270 (8934-632-10000)