Question

Problem 2 (5 points): Anita and Brendan’s filing status is married filing jointly. During 2020 they engaged in the transactions detailed below. Determine their total AGI. LABEL EACH ITEM. a. Anita works at Siyi Company where she earned a salary of $80,000. Siyi Company also paid $9,000 in educational expenses for Anita to pursue her MBA. b. Brendan works at Hyunwoo Industries where he earned a salary of $75,000. c. Anita and Brendan participate in a healthcare plan through Hyunwoo Industries where the company covers all insurance premiums ($7,000). Hyunwoo Industries also offers employees discounted onsite childcare. The couple's two children (ages 3 and 5) both go to childcare at Hyunwoo Industries. The total childcare cost is $18,000 of which half is paid by Brendan and half is paid by Hyunwoo Industries. d. During the year, the couple also received an insurance settlement from a car accident. The insurance company paid $14,000 to reimburse medical expenses and $20,000 in lost wages for the period following the accident when Brendan was unable to work.

Answer 1

Income/Expense Heads	Anita	Brenden	Total HouseHold Income	Notes
Form W-2 wages, salary & tips
Salary	80,000.00	75,000.00	155,000.00
Educational Expsnes ($9,000-$5,250)	3,750.00	0.00	3,750.00	If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250
Company Covers Insurance premium ($7,000)	0.00	0.00	0.00	Employer-paid premiums for health insurance are exempt from federal income and payroll taxes
Insurance Settlement - Medical Expense ($14,000)	0.00	0.00	0.00	Damage to your vehicle or other property in a settlement amount of money is not taxable
Insurance Settlement - Lost Wages	0.00	20,000.00	20,000.00	The compensation you receive to make up for lost wages is taxed, so you will need to include it in your gross income at tax time.
	83,750.00	95,000.00	178,750.00	Total Adjusted Gross Income (AGI)

Deducions & Credits
Child & Dependent Care Expense (18000-9000)	-	-		Childcare cost will reduce the taxable income and it will not affect to Adjusted Gross Income