Question

John Jones is married with two children. His family consists of his wife Jen Jones and his children James Jones and Jackie Jones. This case study is mainly surrounding John's earnings, but Jen also works and receives a salary of $80,000 which SHOULD be included in the overall taxable income calculation and included on Form 1040     

James Jones is 12 years old and lives at home. His parents fully provide for him                                                           

Jackie jones is a 23 year old full time student and lies at school.   She has a part time job and earns $4000 a year. Her parents provide for more than 50% of her support.                                                                              

For this project please use the 2018 tax forms and tax rates                                                                                                                                                                         

Please also use the 2019 IRC 179 expense rules and assume no Bonus Depreciation  

John and Jen Jones - Individual Return                                                                                                                                                                   

                mortgage interest paid $8,000                                                                                                                                                

                property tax paid              $2,500                                                                                                                                                

                Charitable contibutions $11,500                                                                                                                                                              

                Municipal bond interest earned $500                                                                                                                                                    

Stock sale                                                                                                                                                                           

                      basis               $1,000                                                                                                                                                

                      proceeds      $5,000                                                                                                                                                 Requirements                                                                                                                                                                  

1              Calculate the Taxable Income of the Jones Family                                                                                                                                                                             

2              Complete the Jones's Form 1040 and supporting schedules                                                                                                                                                                         

                                                                                                                                                                                               

Answer 1

1. Taxable Income of the Jones family

a. Salary of Jen : $ 80,000

b. Jones salary assumed 5000*12=60,000

b. jackie jones 4000

c. profit on stock sale 4000

d. Bond Interest 500

Total family earnings Jones's = 148500

Less Expenses :

a. Mortgage Interest 8000

b. Property Tax 2500

c. Charitable contributions 11500

d. Jackie support assumed 500pm X 12=6000

e. Family expenses 2000X12=24,000

Total expenses = 52,000

Net Income after expenses = 96,500

Hence taxable income of Jones family is 96,500

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Schedule 1 >> Capital gains Profit on stock sale 4,000

Schedule 5 >> Charitable contributions 11,500

Schedule 4 >> Property tax ....2,500

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