ou are the tax supervisor at a local tax return preparation firm. Suzanne and her husband Steve have been working with the local fire department for 8 years. They have a total income after adjustments (reported on line 11 of the form 1040) of $160,000. After reviewing the preparation of the return, you notice there are a few things not taken into consideration for her tax return preparation. For each of the following questions, provide where the change on the tax return would occur and how much would it effect their taxable income, if they had an effective tax rate of 21% and a marginal tax rate of 24%, prior to the change. The ROTH IRA contribution of $7000 for each of Suzanne and Steve. (5PTS) Fertility treatment for Suzanne, so she should conceive a child. The process is still going on, but in 2020, they spent $15,000 on treatments and racked up 300 miles going back and forth to hospitals. (5PTS) They made a charitable contribution for the Fireman’s Fund, a §501(c), nonprofit program for the relief of families with fallen fire fighters. (5PTS) Mortgage interest: $20,000 in interest in total. (5PTS) $15,000 is from the payment of the original mortgage (from 2005). $5,000 was from payment of credit card debt back in 2015. The refinance was done in 2015 and the total balance of the home equity loan at year end was $60,000.
You are the tax supervisor at a local tax return preparation firm. Suzanne and her husband Steve have been working with the local fire department for 8 years. They have a total income after adjustments (reported on line 11 of the form 1040) of $160,000. After reviewing the preparation of the return, you notice there are a few things not taken into consideration for her tax return preparation. For each of the following questions, provide where the change on the tax return would occur and how much would it effect their taxable income, if they had an effective tax rate of 21% and a marginal tax rate of 24%, prior to the change.
The ROTH IRA contribution of $7000 for each of Suzanne and Steve. (5PTS)
Fertility treatment for Suzanne, so she should conceive a child. The process is still going on, but in 2020, they spent $15,000 on treatments and racked up 300 miles going back and forth to hospitals. (5PTS)
They made a charitable contribution for the Fireman’s Fund, a §501(c), nonprofit program for the relief of families with fallen fire fighters. (5PTS)
Mortgage interest: $20,000 in interest in total. (5PTS)
$15,000 is from the payment of the original mortgage (from 2005).
$5,000 was from payment of credit card debt back in 2015. The refinance was done in 2015 and the total balance of the home equity loan at year end was
$60,000.
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