Noah and Olivia Anderson are a married couple in their early 20s living in Dallas. Noah Anderson earned $73,000 in 2018 from his job as a sales assistant. During the year, his employer withheld $4,975 for income tax purposes. In addition, the Andersons received interest of $350 on a joint savings account, $750 interest on tax-exempt municipal bonds, and dividends of $400 on common stocks. At the end of 2018, the Andersons sold two stocks, A and B. Stock A was sold for $700 and had been purchased four months earlier for $800. Stock B was sold for $1,500 and had been purchased three years earlier for $1,100. Their only child, Logan, age 2, received (as his sole source of income) dividends of $200 from Hershey stock. Although Noah is covered by his company’s pension plan, he plans to contribute $5,000 to a traditional deductible IRA for 2018. Here are the amounts of money paid out during the year by the Andersons: Medical and dental expenses (unreimbursed) $ 200 State and local property taxes 831 Interest paid on home mortgage 4,148 Charitable contributions 1,360 Total $6,539 In addition, Noah incurred some unreimbursed travel costs for an out-of-town business trip: Airline ticket $250 Taxis 20 Lodging 60 Meals (as adjusted to 50 percent of cost) 36 Total $366 Suggest some tax strategies that the Andersons might use to reduce their tax liability for next year?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Noah and Olivia Anderson are a married couple in their early 20s living in Dallas. Noah Anderson earned $73,000 in 2018 from his job as a sales assistant. During the year, his employer withheld $4,975 for income tax purposes. In addition, the Andersons received interest of $350 on a joint savings account, $750 interest on tax-exempt municipal bonds, and dividends of $400 on common stocks. At the end of 2018, the Andersons sold two stocks, A and B. Stock A was sold for $700 and had been purchased four months earlier for $800. Stock B was sold for $1,500 and had been purchased three years earlier for $1,100. Their only child, Logan, age 2, received (as his sole source of income) dividends of $200 from Hershey stock. Although Noah is covered by his company’s pension plan, he plans to contribute $5,000 to a traditional deductible IRA for 2018. Here are the amounts of money paid out during the year by the Andersons:

Medical and dental expenses (unreimbursed) $ 200
State and local property taxes 831
Interest paid on home mortgage 4,148
Charitable contributions 1,360
Total $6,539
In addition, Noah incurred some unreimbursed travel costs for an out-of-town business trip:
Airline ticket $250
Taxis 20
Lodging 60
Meals (as adjusted to 50 percent of cost) 36
Total $366

Suggest some tax strategies that the Andersons might use to reduce their tax liability for next year?

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