Question

Serena is a 40-year-old single taxpayer. She operates a small business on the side as a sole proprietorship. Her 2018 Schedule C reports net profits of $5,624. Her employer does not offer health insurance. Serena pays health insurance premiums of $7,545 in 2018. Serena also pays long-term care insurance premiums of $600 in 2018.

Calculate Serena’s self-employed health care deduction.
$____________

Evan participates in an HSA carrying family coverage for himself, his spouse, and two children. In 2018, Evan has $100 per month deducted from his paycheck and contributed to the HSA. In addition, Evan makes a one-time contribution of $2,000 on April 15, 2019 when he files his tax return. Evan also receives a 2018 Form 1099-SA that reports distributions to Evan of $3,200 which Evan used for medical expenses.

Compute the effect of the HSA transactions on Evan’s adjusted gross income.
These transactions decrease Evan's AGI by $____________

Karen, 28 years old and a single taxpayer, has a salary of $31,000 and rental income of $33,000 for the 2018 calendar tax year. Karen is covered by a pension through her employer. AGI phase-out range for traditional IRA contributions for a single taxpayer who is an active plan participant is $63,000 – $73,000.

a. What is the maximum amount that Karen may deduct for contributions to her traditional IRA for 2018?
$____________

During 2018, Jerry is a self-employed therapist, and his net earned income is $102,400 from his practice. Jerry's SEP Plan, a defined contribution plan, states that he will contribute the maximum amount allowable.

Calculate Jerry's contribution.
$____________

Tony is a 45-year-old self-employed psychiatrist who has net earned income of $300,000 in 2018. What is the maximum amount he can contribute to his SEP for the year?
$_____________

Answer 1

Health insurance premiums paid = $7,545 $600 Long-term care insurance premiums Total health care amount eligible for deduction =$7,545 (health insurance premium) S7,935 $390 (long-term ca re insurance premium) Reported Schedule C net profits $5,624 The health care deduction is limited to the amount of net profit from the business Therefore, Serena will be eligible for a total health care deduction of $5.624