Question

Instructions Note: This problem is for the 2019 tax year. Alfred E. Old and Beulah A. Crane, each age 42, married on September 7, 2017. Alfred and Beulah will file a joint return for 2019. Alfred's Social Security number is 111-11-1109. Beulah's Social Security number is 123-45-6780, and she adopted "Old" as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304. Alfred was divorced from Sarah Old in March 2016. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah's death, whichever occurs first. Alfred pays Sarah $15,000 in 2019. In addition, in January 2019, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years' income taxes. Sarah's Social Security number is 123-45-6788. Alfred's salary for 2019 is $150,000. He is an executive working for Cherry, Inc. (Federal I.D. No. 98-7654321). As part of his compensation package, Cherry provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes. Beulah recently graduated from law school and is employed by Legal Aid Society, Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives a salary of $42,000 in 2019. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes. Alfred and Beulah had interest income of $500. Alfred and Beulah receive a $1,900 refund on their 2018 state income taxes. They claimed the standard deduction on their 2018 Federal income tax return. Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2019. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Both spouses had health insurance for all of 2019 and they do not want to contribute to the Presidential Election Campaign Required: Compute the Olds' net tax payable (or refund due) for 2019. Use Form 1040 and Schedule 1 to complete this tax return. • It may be necessary to complete the tax schedule and worksheet before completing Form 1040. • Enter all amounts as positive numbers. • If an amount box does not require an entry or the answer is zero, enter "O". • Make realistic assumptions about any missing data. • When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar. Use the 2019 Tax Rate Schedule provided. Do not use the Tax Tables.

Answer 1

Computation of Net Tax Payable
of Alfred E Old and Beulah A. Crane
Joint Return for the year 2019
Alfred E Old Social Security Number	111-11-1109
Beulah A Crane Social Security Number	123-45-6780
211, Brickstone Drive, Atlanta , GA 30304
Particular	Amount ($)	Amount($)
Income of Alfred E Old
Income From Salary	150000
Less:- Paid to Sarah for Living Apart	15000
	135000
Group Term Life Insurance	300000
	435000	435000
Income of Beulah A Crane
Income From Salary		42000
Joint Interest Income		500
Total Income		477500
Less Standard Deduction		24400
		453100
Less :- Property Tax	1450
Interest	4500	5950
		447150
Less :- Contribution toward Charity		2400
		444750
Less :- Sales Tax		11800
Taxable Income		432950
Tax on above		111527
Withheld Tax
of Alferd	24900
of Beulah	7500	32400
Tax Payable		79127

Notes :- 1) Mr.Alferd & Beulah Filled its return Jointly hence Income earned by Beulah clubbed with Income of Mr.Alferd in form 1040. 2) Alferd claim deduction for payment to her exwife for living apart in his return for 2019. 3) However he can not claim deduction of $50000 which is being designated for her share of the marital property. 4) Amuot of Group Insurance Clubbed in Mr.Alferd Income as perquisite. 5) Interest earned jointly also clubbed 6) As Mr.Alferd & Beulah filled return jointly they claim a standard deduction of $24400 from there income according to the Tax rate structure. 7) He claim as deduction for the payment of Property Tax, Interest, Contribution to Charity, & Payment of State Sales Tax 8) They also eligible for Tax Credit of Withheld tax deducted by boths employer (i.e. $24900 by Cherry Inc & $7500 by Legal Aid Society.