Question

(birthdate July 1, 1988) and Amy (birthdate July 4, 1990) Booth have brought you the following information regarding their income, expenses, withholding for the year. They are unsure which of these items must be used to calculate taxable income. Income: $28,500 Ken's salary (salesman) Amy's wages (part-time nurse) Insurance reimbursement for repairs from an auto accident 17,500 500 Gift from Unde George 2,000 Interest income from Lodge State Bank 840 Federal income taxes withheld: From Ken's salary 2,600 From Amy's wages 650 Amy owns and operates a computer bookstore named "The Disk Drive". The store is located at 2000 Broadway Street, Menomonie, WI 54751. During 2019, Amy had the following income and expenses: Sales of books $321.000 Expenses Store rental 16.000 Office expense 6.000

Answer 1

Your taxes are estimated at $1,759. Your tax refund $1,491. This is 3.05% of your total income of $57,620. Your total tax payments and refundable credits for the year were $3,250. Your tax refund is estimated at $1,491. Your income puts you in the 12% tax bracket. Income and Income Taxes $60,000 $57,620 $50,000 $40,000 $30,000 $26,220 $20,000 $10,000 $1,759 $0 Total Income Total Taxable Income Total Income Tax

Filing Status and Income Filing status Married filing jointly Wages, salaries, tips, etc. $28,500 $17,500 Spouse wages, salaries, tips, etc. Taxable interest $840 Tax-exempt interest $0 $0 Ordinary dividends (this includes any qualified dividends) Qualified dividends $0 $0 Taxable refunds or credits of state and local income taxes $0 Alimony received for separation or divorce agreements executed on or before December 31st, 2018 $0 Business income or loss (Schedule C & E subject to self-employment taxes) -$1,720 Spouse's business income or loss (Schedule C & E subject

$0 Short term capital gain or loss* $0 Long term capital gain or loss* Other gains or losses $10,000 Taxable IRA distributions $0 Taxable pensions and annuity distributions $0 $0 Intangible drilling costs (IDC) for investor general partners $0 Income from rentals, royalties, S Corporations and Schedule E (not included above and subject to NIIT) $0 Income from rentals, royalties, S Corporations and Schedule E (not included above and not subject to NIIT) $0 Farm income or loss (Schedule F) $0 Unemployment compensation Taxable Social Security hanafita $0

Other income $2,500 Total income $57,620 Adjusted Gross Income Educator expenses $0 $0 Certain business expenses (form 2106) $7,000 Health Savings Account (HSA) deduction (form 8889) $0 Self-employment tax deduction (Schedule SE) $0 Self-employed SEP, SIMPLE and qualified plans $0 Self-employed health insurance deduction $0 Penalty on early withdrawal of savings $0 Alimony paid for separation or divorce agreements executed on or before December 31st, 2018 IRA deduction $0

Student loan interest $0 deduction Based on a modified AGI of $50,620 and total allowable student loan interest of $0 Total adjustments $7,000 Adjusted gross income (AGI) $50,620 Standard Deduction 65 or older? no Blind? no Spouse 65? no Spouse blind? no Total checked above 0 Married filing separately no no Can someone claim you as a dependent? Standard deduction $24,400

Itemized Deduction Medical and dental expenses Actual expenses $0 Allowed deduction $0 Taxes paid (generally state and local) $0 Interest paid $0 Gifts to charity $0 Itemized deduction $0 Tax Adjusted gross income (AGI) $50,620 $24,400 Standard or itemized deduction to use (higher of two options) $0 Qualified business income deduction (Form 8995) Taxable income $26,220 Tax* $2,759 All taxable income was

Taxable income $26,220 Tax* $2,759 All taxable income was taxed using your normal income tax rates, you had no income subject to the lower long term capital gains tax rates or dividend tax rates. $0 Other alternative minimum tax income adjustments $0 Alternative Minimum Tax (AMT) $0 Excess advance premium tax credit repayment (form 8962) Total tax before credits $2,759 Credits

$0 Foreign tax credit (form 1116) $1,000 Credit for child and dependent care credit expenses (form 2441) $0 Education credits (form 8863, line 23) $0 Retirement savings contributions credit (form 8880) Child tax credit $0 Based on 0 qualifying dependents. $0 Residential energy credits (Form 5695) $0 American opportunity credit (Form 8863, non-refundable portion) $0 Other credits that are not refundable Total credits that are non- refundable $1,000 Total tax after credits $1,759

Other Taxes $0 Self-employment tax (Schedule SE) $0 Unreported Social Security and Medicare tax (forms 4137 & 5329) $0 Additional tax on IRAs and other retirement plans (form 5329) $0 Household employment taxes (Schedule H) and Advanced earned income credit (W-2 box 9) $0 First time home buyer credit repayment (Form 5405) $0 Health care: individual responsibility Medicare tax sur-tax on earned income (Form 8959) $0 (0.9% X $0) Net Investment Income Tax (NIIT) (Form 8960) $0 (3.8% X $0) Total other taxes $0 $1,759 Total tax before refundable credits

Other Taxes $0 Self-employment tax (Schedule SE) $0 Unreported Social Security and Medicare tax (forms 4137 & 5329) $0 Additional tax on IRAs and other retirement plans (form 5329) $0 Household employment taxes (Schedule H) and Advanced earned income credit (W-2 box 9) $0 First time home buyer credit repayment (Form 5405) $0 Health care: individual responsibility Medicare tax sur-tax on earned income (Form 8959) $0 (0.9% X $0) Net Investment Income Tax (NIIT) (Form 8960) $0 (3.8% X $0) Total other taxes $0 $1,759 Total tax before refundable credits

Refundable Tax Credits Earned income credit $0 Non-taxable combat pay $0 $0 Reduction for Scholarships, penal income, and retirement income 0 Number of qualifying children Lived in the U.S? yes Qualified child of another? no Age 25 to 65? yes $0 Additional child tax credit (form 8812) $0 American opportunity credit (Form 8863, line 14 refundable portion) $0 Net premium credit (form 8962) $0 Other credits that are refundable, including credit for prior year AMT (Form 8801) and other refundable credits and payments

$0 Net premium credit (form 8962) $0 Other credits that are refundable, including credit for prior year AMT (Form 8801) and other refundable credits and payments Total refundable credits $0 Total Tax Due and Tax Payments Federal income tax withheld on Forms W-2 and 1099 $3,250 $0 Estimated tax payments and amount applied on last year's return $0 Excess Social Security and RRTA tax withheld $0 Any other payments including amount paid with request for extension Total tax $1,759 Total payments $3,250 Your tax refund $1,491