Note: This problem is for the 2018 tax year.
Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1112, respectively. Alice's birthday is September 21, 1971, and Bruce's is June 27, 1970. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (employer identification number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (employer identification number 11-1111111).
The following information is shown on their Wage and Tax Statements (Form W-2) for 2018.
Line | Description | Alice | Bruce |
1 | Wages, tips, other compensation | $58,000 | $62,100 |
2 | Federal income tax withheld | 4,500 | 5,300 |
3 | Social Security wages | 58,000 | 62,100 |
4 | Social Security tax withheld | 3,596 | 3,850 |
5 | Medicare wages and tips | 58,000 | 62,100 |
6 | Medicare tax withheld | 841 | 900 |
15 | State | Massachusetts | Massachusetts |
16 | State wages, tips, etc. | 58,000 | 62,100 |
17 | State income tax withheld | 2,950 | 3,100 |
The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1994, Social Security number 123-45-6788) and John (born February 7, 1998, Social Security number 123-45-6786). Both children are full-time students and live with the Byrds except when they are away at college. Cynthia earned $6,200 from a summer internship in 2018, and John earned $3,800 from a part-time job.
During 2018, the Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (born March 6, 1942, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $1,600,000 on December 28.
The Byrds had the following expenses relating to their personal residence during 2018:
Property taxes | $5,000 |
Qualified interest on home mortgage (acquisition indebtedness) | 8,700 |
Repairs to roof | 5,750 |
Utilities | 4,100 |
Fire and theft insurance | 1,900 |
The Byrds had the following medical expenses for 2018:
Medical insurance premiums | $4,500 |
Doctor bill for Sam incurred in 2017 and not paid until 2018 | 7,600 |
Operation for Sam | 8,500 |
Prescription medicines for Sam | 900 |
Hospital expenses for Sam | 3,500 |
Reimbursement from insurance company, received in 2018 | 3,600 |
The medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support.
Other relevant information follows:
Required:
Compute the Alice J. and Bruce M. Byrd's Federal income tax for 2018. by providing the following information that would be reported on Form 1040, Schedules A and B. If they have overpaid, they want the amount to be refunded to them.
Byrd's Form 1040:
1. Filing status and dependents: The taxpayers'
filing status:
Married filing jointly
Indicate whether the following individuals can be claimed as a
dependent by Alice and Bruce.
Cynthia: No
Sam: Yes
John: Yes
2. Calculate taxable gross income.
$
3. Calculate the total deductions for
AGI.
$0.00
4. Calculate adjusted gross income.
$
5. Calculate the greater of the standard
deduction or itemized deductions.
$
6. Calculate total taxable income.
$
7. Calculate the income tax liability.
$
8. Calculate any other taxes due.
$0.00
9. Calculate the total tax credits
available.
$
10. Calculate total withholding and tax
payments.
$
11. Calculate the amount overpaid
(refund):
$0.00
12. Calculate the amount of taxes owed:
$
Schedule A Information
Provide the following that would be reported on the Alice and Bruce Byrd's Schedule A:
1. Calculate the deduction allowed for medical
and dental expenses. (Round computations to the nearest
dollar.)
$
2. Calculate the allowable deduction for
taxes.
$
3. Calculate the deduction for interest.
$
4. Calculate the charitable deduction
allowed.
$
5. Calculate total itemized deductions.
$
Schedule B Information
Provide the following that would be reported on the Alice and Bruce Byrd's Schedule B:
1. Calculate the interest amount:
$
2. Calculate the ordinary dividends:
$0.00
Note: This problem is for the 2018 tax year. Alice J. and Bruce M. Byrd are...
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