Holly and Zachary Neal, from Dublin, Virginia, are preparing to file their 2020 income taxes. Their children are grown; however, Holly's mother, Martha, has moved in with them. As Holly is mow caring forher mother, she is no longer working. Martha is dependent on their income for support except for her $543.78 monthly Social Security benefit.Zachary works for a software company and earns anough to keep their heads above water; however, he had to discontinue paticipation in his retirement plan so they could pay the bills. Holly is taking thisopportunity to work toward her master's degree. They know they will file jointly but need your help preparing their tax return. They have gathered all of the appropriate records:a. Are Martha's unreimbursed medical expense deductible on the Neals' tax return? Why or why not?b. Is Martha required to file a tax return? Why or why not?c. What tax advantage(s), attributable to Holly's education expenses, can the Neals include on their return?d. How much of the total medical expenses will the Neals be able to deduct on their taxes?e. Can the Neals' IRA contributions be deducted on their tax return? If so, to what extent?f. Would the Neals benefit from itemizing their deductions? Why?g. Calculate the Neals' total 2020 tax liability using the method most advantageous to them.h. Should Zach have his employer adjust his federal tax withholding amount? Why or Why not?O D. are deductible even though Martha does not qualify as a dependent because she provides less than half of her own living expenses and is a U.S. citizen.b. Is Martha required to file a tax return? Why or why not? (Select the best answer below.)A. Although Martha qualifies as a dependent, thus triggering lower income tax filing thresholds, she does not have additional income; therefore, her Social Security income is inadequate to require filing aseparate tax return.O B.Martha qualifies as a dependent, but she is still required to file a separate tax return because she received money from Social Security.O C.Martha qualifies as a dependent; therefore, no matter how much additional income she may have, she is not required to file a separate tax return.O D. Although Martha qualifies as a dependent, thus triggering lower income tax filing thresholds, she does not have additional income; therefore, her Social Security income is adequate to require filing aseparate tax return.c. There are two tax advantages associated with Holly's education expenses. First, they can claim a Lifetime Learning tax credit of $, as the Neals' income is below the income phase-out for thecredit. Second, the Sin interest payments is an adjustment to income for the tax year, as again the Neals' income is less than the phase-out level for eligibility. (Round to the nearest cent.)

TaxationTaxation refers to the process where a governing body, typically a government, imposes a…

Holly and Zachary Neal, from Dublin, Virginia, are preparing to file their 2020 income taxes. Their children are grown; however, Holly's mother, Martha, has moved in with them. As Holly is mow caring for her mother, she is no longer working. Martha is dependent on their income for support except for her $543.78 monthly Social Security benefit. Zachary works for a software company and earns anough to keep their heads above water, however, he had to discontinue paticipation in his retirement plan so they could pay the bills. Holly is taking opportunity to work toward her master's degree. They know they will file jointly but need your help preparing their tax return. They have gathered all of the appropriate records: a. Are Martha's unreimbursed medical expense deductible on the Neals' tax return? Why or why not? b. Is Martha required to file a tax return? Why or why not? c. What tax advantage(s), attributable to Holly's education expenses, can the Neals include on their return? d. How much of the total medical expenses will the Neals be able to deduct on their taxes? e. Can the Neals' IRA contributions be deducted on their tax return? If so, to what extent? f. Would the Neals benefit from itemizing their deductions? Why? g. Calculate the Neals' total 2020 tax liability using the method most advantageous to them. h. Should Zach have his employer adjust his federal tax withholding amount? Why or Why not?

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q