Question

John and May are married with two dependent children, file a joint return. They provide you with the following information:

Medical and dental expenses (not reimbursed)	$ 3,650
State income taxes	7,950
Real estate taxes	4,710
Personal property taxes (ad valorem)	1,325
Interest on home mortgage	17,800
Form 4952 shows deductible investment interest	800
Charitable contributions (made by cash or check)	2,000
Form 4684 shows a casualty loss deduction	600
AGI	188,850

What is the taxable income and tax liability for 2018?

Answer 1

		AGI-ADJUSTED GROSS INCOME				188,850
Medical and Dental Expenses	1	Medical and dental expenses (not reimbursed)		3650
	2	Enter amount from Form 1040, line 7		188,850
	3	Multiply line 2 by 7.5% (0.075) . .		14163.75
	4	Subtract line 3 from line 1. If line 3 is more than line 1, enter -0-		0	0
Taxes You Paid	5	State and local taxes.
	a	State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box . . . . . . . .		7,950
	b	State and local real estate taxes (see instructions)		4,710
	c	State and local personal property taxes .		1,325
	d	Add lines 5a through 5c		13,985
	e	Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately) .		10,000
	6	Other taxes. List type and amount		0
	7	Add lines 5e and 6		10,000	10,000
Interest You Paid	8	Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box
	a	Home mortgage interest and points reported to you on Form 1098		17,800
	b	Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address		0
	c	c Points not reported to you on Form 1098. See instructions for special rules .		0
	d	Reserved
	e	Add lines 8a through 8c .		17,800
	9	Investment interest. Attach Form 4952 if required. See instructions .		800
	10	Add lines 8e and 9		18,600	18,600
Gifts to Charity	11	Gifts by cash or check. If you made any gift of $250 or more, see instructions		2000
	12	Other than by cash or check. If any gift of $250 or more, see instructions. You must attach Form 8283 if over $500		0
	13	Carryover from prior year		0
	14	Add lines 11 through 13 .		2000	2000
Casualty and Theft Losses	15	Casualty and theft loss(es) from a federally declared disaster (other than net qualified disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions . .		600	600
Other Itemized Deductions	16	Other—from list in instructions. List type and amount		0	0
Total Itemized Deductions	17	Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Form 1040, line 8 .			31200
	18	If you elect to itemize deductions even though they are less than your standard deduction, check here
		Standard Deduction for— • Single or married filing separately, $12,000 • Married filing jointly or Qualifying widow(er), $24,000 • Head of household, $18,000 • If you checked any box under Standard deduction, see instructions			24000	157,650
		Standard Deduction or Itemized Deduction whichever is Higher				31200
		TAXABLE INCOME after considering itemed or standard deduction				157,650
		TAX ON TOTAL INCOME				26562
		Taxable Income	Rate
		$0 - $19,050	10.00%		1905
		$19,050 - $77,400	12.00%		7002
		$77,400 - $165,000	22.00%		17655
		$165,000 - $315,000	24.00%		0
		$315,000 - $400,000	32.00%		0
		$400,000 - $600,000	35.00%		0
		$600,000+	37.00%		0
	@	ADJUSTED GROSS INCOME (AGI) TOTAL GROSS INCOME - SPECIFIC DEDUCTION
	@	TAXABLE INCOME = AGI - ALLOWANCES FOR PERSONAL EXP AND ITEMIZED DEFINITION
	@	Itemized deduction is claimable in place of standard deduction