Question

Given the following information, complete the attached forms for the 2020 1040 tax return.

• Tim and Mandy Sanders, MFJ taxpayers, both 50 years old, 2 qualified dependent children over the age of 17—Sarah and Brian.
• Total wages earned for the married couple: $65,000.
  • Federal Income Tax Withheld by employer: $8,500.
• No reportable wages for the children.
• Taxable Interest: $1,200
• Tax-Exempt Interest: $1,350
• Social Security Benefits received by Mandy: $21,000.
  • No Federal Income Tax Withheld
• Total Itemized deductions: $11,400
• All were covered by insurance provided by Tim’s employer.
• The Sanders are not subject to AMT.
• No FOR AGI deductions allowed.
• No tax credits allowed other than for the dependent children.

Answer 1

Particulars	see Notes below	Actual Amout$	Taxable Amount$
Total Wages for cuouples	1	65,000	65,000
Social Security Benefits 85% for MFJ	2	21,000	17,850
Interest Taxable		1,200	1,200
Interest Exempted		1,350	-
Total Income			84,050
Less: Alimony Paid			-
: Retirement Saving Contribution Credit		-
Adjusted Gross Income			84,050
Standard or Itemized deduction	3		24,800
Taxable Income			59,250
Total Tax before credits			6,718
child tax credit	4		4,000
Total Tax after credit			2,718
Federal Income Tax withheld Refundable credits		8,500

1. wages recieved by couple is fullly taxable

2. social security benefits : 85% of amount received $ 21,000 is taxable

The portion of benefits subject to taxation varies with income level.

• up to 50 percent of your benefits if of income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly.
• up to 85 percent of your benefits if your income is more than $34,000 (individual) or $44,000 (couple).

3. standard dedcution or itemized deduction . if itemized deduction is less than standard deduction better to claim standard dedcution

in the above itemized deduction is $11400, whereas standard deduction comes to 12400x2 = $24800 for couple, hench claimed standard deduction

4. child tax credits :  up to $2,000 per qualifying child

$ 2000 x 2 children = $4000