Question

Note: This problem is for the 2018 tax year.

Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice's parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election Campaign Fund.

During 2018, Janice reported the following income and expense items connected with her business.

Income from sale of articles	$85,000
Rent	16,500
Utilities	7,900
Supplies	1,800
Insurance	5,000
Travel (including meals of $1,200)	3,500

Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under § 179, if possible.

• Furniture and fixtures (new) costing $21,000 on January 10.
• Computer equipment (new) costing $12,400 on July 28.

Janice’s itemized deductions include:

State income tax	$2,950
Home mortgage interest paid to First National Bank	6,000
Property taxes on home	2,500
Charitable contribution to her alma mater, State College	1,200

Janice did not keep a record of the sales tax she paid. The amount from the sales tax table is $437.
Janice reports interest income of $4,000 on certificates of deposit at Second National Bank. She made estimated tax payments of $3,000 for 2018.

Required:
Compute Janice Morgan’s 2018 Federal income tax payable (or refund due) by providing the following information that would be reported on Form 1040 and Schedules A, B, C, and SE.

• Make realistic assumptions about any missing data.
• If an amount is zero, enter "0".
• Enter all amounts as positive numbers.
• When computing the tax liability, do not round your immediate calculations.
• If required, round your final answers to the nearest dollar.

• Provide the following that would be reported on Janice's Form 1040:

  1. Filing status: The taxpayers' filing status:
  

  2. Calculate taxable gross income.
  $

  3. Calculate the total adjustments for AGI.
  $

  4. Calculate adjusted gross income.
  $

  5. Calculate the greater of the standard deduction or itemized deductions.
  $

  6. Calculate the qualified busies income deduction.
  $

  7. Calculate total taxable income.
  $

  8. Calculate the income tax liability.
  $

  9 Calculate SE taxes due.
  $

  10. Calculate the total tax credits available.
  $

  11. Calculate total withholding and tax payments.
  $

  12. Calculate the amount overpaid (refund):
  $

  13. Calculate the amount of taxes owed:
  $

  Provide the following that would be reported on Janice's Schedule A:

  1. Calculate the deduction allowed for medical and dental expenses.
  $

  2. Calculate the deduction for taxes.
  $

  3. Calculate the deduction for interest.
  $

  4. Calculate the charitable deduction allowed.
  $

  5. Calculate total itemized deductions.
  $Provide the following that would be reported on Janice's Schedule B:

  1. Calculate the interest amount:
  $

  2. Calculate the ordinary dividends:
  $

  Provide the following that would be reported on Janice's Schedule C:

  1. Calculate income from sales:
  $

  2. Calculate total expenses:
  $

  3. Calculate net profit or loss
  $ Provide the following that would be reported on Janice's Form 4562.

  Click here to access Exhibit 8.1 and the depreciation tables in the textbook.

  1. Calculate the total deprecation for the furniture and fixtures:
  $

  2. Calculate the total depreciation for the computer equipment.
  $

  Provide the following that would be reported on Janice's Scheduled SE. When computing the self-employment tax liability, do not round your calculations. Round your final answers to the nearest dollar. Use rounded amount when determining the deduction for self-employment tax.

  1. Calculate the self-employment liability:
  $

  2. Calculate the eduction for self-employment tax:
  $

  2018 Tax Rate Schedules

  Use the 2018 Tax Rate Schedules to compute the tax.

  Note: Because the tax rate schedules are used instead of the tax tables, the amount of tax computed may vary slightly from the amount listed in the tables. This variation occurs because the tax for a particular income range in the tax table is based on the midpoint amount.

  2018 Tax Rate Schedules
  Single—Schedule X											Head of household—Schedule Z
  If taxable income is: Over—		But not over—		The tax is:				of the amount over—			If taxable income is: Over—		But not over—		The tax is:				of the amount over—
  $0		$9,525		. . . . . .		10%		$0			$0		$13,600		. . . . . .		10%		$0
  9,525		38,700		$952.50	+	12%		9,525			13,600		51,800		$1,360.00	+	12%		13,600
  38,700		82,500		4,453.50	+	22%		38,700			51,800		82,500		5,944.00	+	22%		51,800
  82,500		157,500		14,089.50	+	24%		82,500			82,500		157,500		12,698.00	+	24%		82,500
  157,500		200,000		32,089.50	+	32%		157,500			157,500		200,000		30,698.00	+	32%		157,500
  200,000		500,000		45,689.50	+	35%		200,000			200,000		500,000		44,298.00	+	35%		200,000
  500,000		. . . . . .		150,689.50	+	37%		500,000			500,000		. . . . . .		149,298.00	+	37%		500,000
  Married filing jointly or Qualifying widow(er)—Schedule Y-1											Married filing separately—Schedule Y-2
  If taxable income is: Over—		But not over—		The tax is:				of the amount over—			If taxable income is: Over—		But not over—		The tax is:				of the amount over—
  $0		$19,050		. . . . . .		10%		$0			$0		$9,525		. . . . . .		10%		$0
  19,050		77,400		$1,905.00	+	12%		19,050			9,525		38,700		$952.50	+	12%		9,525
  77,400		165,000		8,907.00	+	22%		77,400			38,700		82,500		4,453.50	+	22%		38,700
  165,000		315,000		28,179.00	+	24%		165,000			82,500		157,500		14,089.50	+	24%		82,500
  315,000		400,000		64,179.00	+	32%		315,000			157,500		200,000		32,089.50	+	32%		157,500
  400,000		600,000		91,379.00	+	35%		400,000			200,000		300,000		45,689.50	+	35%		200,000
  600,000		. . . . . .		161,379.00	+	37%		600,000			300,000		. . . . . .		80,689.50	+	37%		300,000

Answer 1

Since multiple questions are there, answering for the main question Total Taxable amount, Total tax payable and Net tax payable or refund

Income from sale of articles	85,000
Less:
Rent	-16,500
Utilities	-7,900
Supplies	-1,800
Insurance	-5,000
Travel (including meals of $1,200)	-3,500
Depreciation on Furniture	-21,000
Depreciation on Computer	-12,400
Net Income	16,900
Less: itemized deductions
State income tax	-2,950
Home mortgage interest paid to First National Bank	-6,000
Property taxes on home	-2,500
Charitable contribution to her alma mater, State College	-1,200
Net Income after Itemized Deductions	4,250
Add: Interest Income	4,000
Total Taxable Income	8,250
Income tax @ 10%	825
Tax Paid in 2018	3000
Refund of Excess Tax paid	2175