Compute net tax payable or refund due for Person A and Person B for 2018.

Question

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Answer 1

Question

Chapter 10, Problem 41CP

(1)

To determine

Compute net tax payable or refund due for Person A and Person B for 2018.

(1)

Expert Solution

Explanation of Solution

Compute net tax payable or refund due for Person A and Person B for 2018:

Particulars	Amount ($)
Person B's salary	$62,100
Person A's salary	$58,000
Interest income	$2,750
Adjusted gross income	$122,850
Less: Itemized deductions (1)	($36,486)
Taxable income	$86,364
Tax from 2018 Married filing Joint tax table	$10,879
Less: Prepayments and Credits
Income tax withheld ($5,300 + $4,500)	($9,800)
Dependent tax credit (2) (2 × $500)	($1,000)
Net tax payable (or refund due) for 2018	$79

Table (1)

Therefore, net tax payable for 2018 is $79.

Note: The taxpayer is not subjected to the AMT.

Working note (1): Compute the total itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$4,500
Doctor bill for Person S paid in 2018 for services in 2017	$7,600
Operations for Person S	$8,500
Prescription medicines for Person S	$900
Hospital expenses for Person S	$3,500
Total medical expenses	$25,000
Less: Reimbursement received in 2018	($3,600)
Less: 7.5% of $122,850 AGI	($9,214)
Medical expenses deductible in 2018		$12,186
Taxes:
State income taxes ($3,100 + $2,950 + $900)	$6,950
Property taxes on residence	$5,000
	$11,950
Overall limit on state and local taxes		$10,000
Qualifies interest on home mortgage		$8,700
Charitable contributions: (3)
Church contribution	$5,000
Tickets to charity dinner dance	$250
(Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible)
used clothing donated (limited to fair market value)	$350	$5,600
Total itemized deductions		$36,486

Table (2)

Therefore, total itemized deductions $36,486.

Note: The expenses for Person A’s uniforms and laundry ($850 + $566) and Person B’s professional journals and dues ($400 + $741) are employee business expenses (and miscellaneous itemized deductions). The TCJA of 2017 suspends the deduction for miscellaneous itemized deductions from the year 2018 through 2025.

Person A and Person B would opt for itemize their deductions since total itemized deductions exceed the standard deduction of $24,000 for the year 2018 for married persons filing jointly.

Working note (2): Determine the dependent tax credit:

In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.

Working note (3): Determine charitable contribution:

The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.

(2)

To determine

Compute the taxable income and tax liability for 2018 in the given situation.

(2)

Expert Solution

Explanation of Solution

Compute the taxable income and tax liability for 2018 in the given situation:

Particulars	Amount ($)
Person B's salary	$88,000
Interest income ($32,000 + $2,750)	$34,750
Adjusted gross income	$122,750
Less: Itemized deductions (4)	($30,794)
Taxable income	$91,956
Tax liability from 2018 Married, filing jointly tax rate schedule	$12,109

Table (3)

Therefore, Tax liability from 2018 married, filing jointly tax rate schedule is $12,109.

Working note (4): Determine the itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$9,769
Estimated costs for Person A ($15,400 − $6,400)	$9,000
Less: 10% of $122,750 AGI	($12,275)	$6,494
Taxes:
State income taxes ($3,100 + $4,000)	$7,100
Property taxes on residence	$5,100
	$12,200
Overall limit on state and local taxes		$10,000
Qualified interest on home mortgage		$8,700
Charitable contributions		$5,600
Total itemized deductions		$30,794

Table (4)

Therefore, total itemized deductions $30,794.

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Answer 2

Question

Chapter 10, Problem 41CP

(1)

To determine

Compute net tax payable or refund due for Person A and Person B for 2018.

(1)

Expert Solution

Explanation of Solution

Compute net tax payable or refund due for Person A and Person B for 2018:

Particulars	Amount ($)
Person B's salary	$62,100
Person A's salary	$58,000
Interest income	$2,750
Adjusted gross income	$122,850
Less: Itemized deductions (1)	($36,486)
Taxable income	$86,364
Tax from 2018 Married filing Joint tax table	$10,879
Less: Prepayments and Credits
Income tax withheld ($5,300 + $4,500)	($9,800)
Dependent tax credit (2) (2 × $500)	($1,000)
Net tax payable (or refund due) for 2018	$79

Table (1)

Therefore, net tax payable for 2018 is $79.

Note: The taxpayer is not subjected to the AMT.

Working note (1): Compute the total itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$4,500
Doctor bill for Person S paid in 2018 for services in 2017	$7,600
Operations for Person S	$8,500
Prescription medicines for Person S	$900
Hospital expenses for Person S	$3,500
Total medical expenses	$25,000
Less: Reimbursement received in 2018	($3,600)
Less: 7.5% of $122,850 AGI	($9,214)
Medical expenses deductible in 2018		$12,186
Taxes:
State income taxes ($3,100 + $2,950 + $900)	$6,950
Property taxes on residence	$5,000
	$11,950
Overall limit on state and local taxes		$10,000
Qualifies interest on home mortgage		$8,700
Charitable contributions: (3)
Church contribution	$5,000
Tickets to charity dinner dance	$250
(Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible)
used clothing donated (limited to fair market value)	$350	$5,600
Total itemized deductions		$36,486

Table (2)

Therefore, total itemized deductions $36,486.

Note: The expenses for Person A’s uniforms and laundry ($850 + $566) and Person B’s professional journals and dues ($400 + $741) are employee business expenses (and miscellaneous itemized deductions). The TCJA of 2017 suspends the deduction for miscellaneous itemized deductions from the year 2018 through 2025.

Person A and Person B would opt for itemize their deductions since total itemized deductions exceed the standard deduction of $24,000 for the year 2018 for married persons filing jointly.

Working note (2): Determine the dependent tax credit:

In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.

Working note (3): Determine charitable contribution:

The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.

(2)

To determine

Compute the taxable income and tax liability for 2018 in the given situation.

(2)

Expert Solution

Explanation of Solution

Compute the taxable income and tax liability for 2018 in the given situation:

Particulars	Amount ($)
Person B's salary	$88,000
Interest income ($32,000 + $2,750)	$34,750
Adjusted gross income	$122,750
Less: Itemized deductions (4)	($30,794)
Taxable income	$91,956
Tax liability from 2018 Married, filing jointly tax rate schedule	$12,109

Table (3)

Therefore, Tax liability from 2018 married, filing jointly tax rate schedule is $12,109.

Working note (4): Determine the itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$9,769
Estimated costs for Person A ($15,400 − $6,400)	$9,000
Less: 10% of $122,750 AGI	($12,275)	$6,494
Taxes:
State income taxes ($3,100 + $4,000)	$7,100
Property taxes on residence	$5,100
	$12,200
Overall limit on state and local taxes		$10,000
Qualified interest on home mortgage		$8,700
Charitable contributions		$5,600
Total itemized deductions		$30,794

Table (4)

Therefore, total itemized deductions $30,794.

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Answer 3

Question

Chapter 10, Problem 41CP

(1)

To determine

Compute net tax payable or refund due for Person A and Person B for 2018.

(1)

Expert Solution

Explanation of Solution

Compute net tax payable or refund due for Person A and Person B for 2018:

Particulars	Amount ($)
Person B's salary	$62,100
Person A's salary	$58,000
Interest income	$2,750
Adjusted gross income	$122,850
Less: Itemized deductions (1)	($36,486)
Taxable income	$86,364
Tax from 2018 Married filing Joint tax table	$10,879
Less: Prepayments and Credits
Income tax withheld ($5,300 + $4,500)	($9,800)
Dependent tax credit (2) (2 × $500)	($1,000)
Net tax payable (or refund due) for 2018	$79

Table (1)

Therefore, net tax payable for 2018 is $79.

Note: The taxpayer is not subjected to the AMT.

Working note (1): Compute the total itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$4,500
Doctor bill for Person S paid in 2018 for services in 2017	$7,600
Operations for Person S	$8,500
Prescription medicines for Person S	$900
Hospital expenses for Person S	$3,500
Total medical expenses	$25,000
Less: Reimbursement received in 2018	($3,600)
Less: 7.5% of $122,850 AGI	($9,214)
Medical expenses deductible in 2018		$12,186
Taxes:
State income taxes ($3,100 + $2,950 + $900)	$6,950
Property taxes on residence	$5,000
	$11,950
Overall limit on state and local taxes		$10,000
Qualifies interest on home mortgage		$8,700
Charitable contributions: (3)
Church contribution	$5,000
Tickets to charity dinner dance	$250
(Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible)
used clothing donated (limited to fair market value)	$350	$5,600
Total itemized deductions		$36,486

Table (2)

Therefore, total itemized deductions $36,486.

Note: The expenses for Person A’s uniforms and laundry ($850 + $566) and Person B’s professional journals and dues ($400 + $741) are employee business expenses (and miscellaneous itemized deductions). The TCJA of 2017 suspends the deduction for miscellaneous itemized deductions from the year 2018 through 2025.

Person A and Person B would opt for itemize their deductions since total itemized deductions exceed the standard deduction of $24,000 for the year 2018 for married persons filing jointly.

Working note (2): Determine the dependent tax credit:

In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.

Working note (3): Determine charitable contribution:

The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.

(2)

To determine

Compute the taxable income and tax liability for 2018 in the given situation.

(2)

Expert Solution

Explanation of Solution

Compute the taxable income and tax liability for 2018 in the given situation:

Particulars	Amount ($)
Person B's salary	$88,000
Interest income ($32,000 + $2,750)	$34,750
Adjusted gross income	$122,750
Less: Itemized deductions (4)	($30,794)
Taxable income	$91,956
Tax liability from 2018 Married, filing jointly tax rate schedule	$12,109

Table (3)

Therefore, Tax liability from 2018 married, filing jointly tax rate schedule is $12,109.

Working note (4): Determine the itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$9,769
Estimated costs for Person A ($15,400 − $6,400)	$9,000
Less: 10% of $122,750 AGI	($12,275)	$6,494
Taxes:
State income taxes ($3,100 + $4,000)	$7,100
Property taxes on residence	$5,100
	$12,200
Overall limit on state and local taxes		$10,000
Qualified interest on home mortgage		$8,700
Charitable contributions		$5,600
Total itemized deductions		$30,794

Table (4)

Therefore, total itemized deductions $30,794.

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Answer 4

Question

Chapter 10, Problem 41CP

(1)

To determine

Compute net tax payable or refund due for Person A and Person B for 2018.

(1)

Expert Solution

Explanation of Solution

Compute net tax payable or refund due for Person A and Person B for 2018:

Particulars	Amount ($)
Person B's salary	$62,100
Person A's salary	$58,000
Interest income	$2,750
Adjusted gross income	$122,850
Less: Itemized deductions (1)	($36,486)
Taxable income	$86,364
Tax from 2018 Married filing Joint tax table	$10,879
Less: Prepayments and Credits
Income tax withheld ($5,300 + $4,500)	($9,800)
Dependent tax credit (2) (2 × $500)	($1,000)
Net tax payable (or refund due) for 2018	$79

Table (1)

Therefore, net tax payable for 2018 is $79.

Note: The taxpayer is not subjected to the AMT.

Working note (1): Compute the total itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$4,500
Doctor bill for Person S paid in 2018 for services in 2017	$7,600
Operations for Person S	$8,500
Prescription medicines for Person S	$900
Hospital expenses for Person S	$3,500
Total medical expenses	$25,000
Less: Reimbursement received in 2018	($3,600)
Less: 7.5% of $122,850 AGI	($9,214)
Medical expenses deductible in 2018		$12,186
Taxes:
State income taxes ($3,100 + $2,950 + $900)	$6,950
Property taxes on residence	$5,000
	$11,950
Overall limit on state and local taxes		$10,000
Qualifies interest on home mortgage		$8,700
Charitable contributions: (3)
Church contribution	$5,000
Tickets to charity dinner dance	$250
(Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible)
used clothing donated (limited to fair market value)	$350	$5,600
Total itemized deductions		$36,486

Table (2)

Therefore, total itemized deductions $36,486.

Note: The expenses for Person A’s uniforms and laundry ($850 + $566) and Person B’s professional journals and dues ($400 + $741) are employee business expenses (and miscellaneous itemized deductions). The TCJA of 2017 suspends the deduction for miscellaneous itemized deductions from the year 2018 through 2025.

Person A and Person B would opt for itemize their deductions since total itemized deductions exceed the standard deduction of $24,000 for the year 2018 for married persons filing jointly.

Working note (2): Determine the dependent tax credit:

In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.

Working note (3): Determine charitable contribution:

The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.

(2)

To determine

Compute the taxable income and tax liability for 2018 in the given situation.

(2)

Expert Solution

Explanation of Solution

Compute the taxable income and tax liability for 2018 in the given situation:

Particulars	Amount ($)
Person B's salary	$88,000
Interest income ($32,000 + $2,750)	$34,750
Adjusted gross income	$122,750
Less: Itemized deductions (4)	($30,794)
Taxable income	$91,956
Tax liability from 2018 Married, filing jointly tax rate schedule	$12,109

Table (3)

Therefore, Tax liability from 2018 married, filing jointly tax rate schedule is $12,109.

Working note (4): Determine the itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$9,769
Estimated costs for Person A ($15,400 − $6,400)	$9,000
Less: 10% of $122,750 AGI	($12,275)	$6,494
Taxes:
State income taxes ($3,100 + $4,000)	$7,100
Property taxes on residence	$5,100
	$12,200
Overall limit on state and local taxes		$10,000
Qualified interest on home mortgage		$8,700
Charitable contributions		$5,600
Total itemized deductions		$30,794

Table (4)

Therefore, total itemized deductions $30,794.

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Answer 5

Chapter 10, Problem 41CP

(1)

To determine

Compute net tax payable or refund due for Person A and Person B for 2018.

(1)

Expert Solution

Explanation of Solution

Compute net tax payable or refund due for Person A and Person B for 2018:

Particulars	Amount ($)
Person B's salary	$62,100
Person A's salary	$58,000
Interest income	$2,750
Adjusted gross income	$122,850
Less: Itemized deductions (1)	($36,486)
Taxable income	$86,364
Tax from 2018 Married filing Joint tax table	$10,879
Less: Prepayments and Credits
Income tax withheld ($5,300 + $4,500)	($9,800)
Dependent tax credit (2) (2 × $500)	($1,000)
Net tax payable (or refund due) for 2018	$79

Table (1)

Therefore, net tax payable for 2018 is $79.

Note: The taxpayer is not subjected to the AMT.

Working note (1): Compute the total itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$4,500
Doctor bill for Person S paid in 2018 for services in 2017	$7,600
Operations for Person S	$8,500
Prescription medicines for Person S	$900
Hospital expenses for Person S	$3,500
Total medical expenses	$25,000
Less: Reimbursement received in 2018	($3,600)
Less: 7.5% of $122,850 AGI	($9,214)
Medical expenses deductible in 2018		$12,186
Taxes:
State income taxes ($3,100 + $2,950 + $900)	$6,950
Property taxes on residence	$5,000
	$11,950
Overall limit on state and local taxes		$10,000
Qualifies interest on home mortgage		$8,700
Charitable contributions: (3)
Church contribution	$5,000
Tickets to charity dinner dance	$250
(Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible)
used clothing donated (limited to fair market value)	$350	$5,600
Total itemized deductions		$36,486

Table (2)

Therefore, total itemized deductions $36,486.

Note: The expenses for Person A’s uniforms and laundry ($850 + $566) and Person B’s professional journals and dues ($400 + $741) are employee business expenses (and miscellaneous itemized deductions). The TCJA of 2017 suspends the deduction for miscellaneous itemized deductions from the year 2018 through 2025.

Person A and Person B would opt for itemize their deductions since total itemized deductions exceed the standard deduction of $24,000 for the year 2018 for married persons filing jointly.

Working note (2): Determine the dependent tax credit:

In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.

Working note (3): Determine charitable contribution:

The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.

(2)

To determine

Compute the taxable income and tax liability for 2018 in the given situation.

(2)

Expert Solution

Explanation of Solution

Compute the taxable income and tax liability for 2018 in the given situation:

Particulars	Amount ($)
Person B's salary	$88,000
Interest income ($32,000 + $2,750)	$34,750
Adjusted gross income	$122,750
Less: Itemized deductions (4)	($30,794)
Taxable income	$91,956
Tax liability from 2018 Married, filing jointly tax rate schedule	$12,109

Table (3)

Therefore, Tax liability from 2018 married, filing jointly tax rate schedule is $12,109.

Working note (4): Determine the itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$9,769
Estimated costs for Person A ($15,400 − $6,400)	$9,000
Less: 10% of $122,750 AGI	($12,275)	$6,494
Taxes:
State income taxes ($3,100 + $4,000)	$7,100
Property taxes on residence	$5,100
	$12,200
Overall limit on state and local taxes		$10,000
Qualified interest on home mortgage		$8,700
Charitable contributions		$5,600
Total itemized deductions		$30,794

Table (4)

Therefore, total itemized deductions $30,794.

Answer 6

Chapter 10, Problem 41CP

(1)

To determine

Compute net tax payable or refund due for Person A and Person B for 2018.

(1)

Expert Solution

Explanation of Solution

Compute net tax payable or refund due for Person A and Person B for 2018:

Particulars	Amount ($)
Person B's salary	$62,100
Person A's salary	$58,000
Interest income	$2,750
Adjusted gross income	$122,850
Less: Itemized deductions (1)	($36,486)
Taxable income	$86,364
Tax from 2018 Married filing Joint tax table	$10,879
Less: Prepayments and Credits
Income tax withheld ($5,300 + $4,500)	($9,800)
Dependent tax credit (2) (2 × $500)	($1,000)
Net tax payable (or refund due) for 2018	$79

Table (1)

Therefore, net tax payable for 2018 is $79.

Note: The taxpayer is not subjected to the AMT.

Working note (1): Compute the total itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$4,500
Doctor bill for Person S paid in 2018 for services in 2017	$7,600
Operations for Person S	$8,500
Prescription medicines for Person S	$900
Hospital expenses for Person S	$3,500
Total medical expenses	$25,000
Less: Reimbursement received in 2018	($3,600)
Less: 7.5% of $122,850 AGI	($9,214)
Medical expenses deductible in 2018		$12,186
Taxes:
State income taxes ($3,100 + $2,950 + $900)	$6,950
Property taxes on residence	$5,000
	$11,950
Overall limit on state and local taxes		$10,000
Qualifies interest on home mortgage		$8,700
Charitable contributions: (3)
Church contribution	$5,000
Tickets to charity dinner dance	$250
(Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible)
used clothing donated (limited to fair market value)	$350	$5,600
Total itemized deductions		$36,486

Table (2)

Therefore, total itemized deductions $36,486.

Note: The expenses for Person A’s uniforms and laundry ($850 + $566) and Person B’s professional journals and dues ($400 + $741) are employee business expenses (and miscellaneous itemized deductions). The TCJA of 2017 suspends the deduction for miscellaneous itemized deductions from the year 2018 through 2025.

Person A and Person B would opt for itemize their deductions since total itemized deductions exceed the standard deduction of $24,000 for the year 2018 for married persons filing jointly.

Working note (2): Determine the dependent tax credit:

In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.

Working note (3): Determine charitable contribution:

The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.

Answer 7

Chapter 10, Problem 41CP

(1)

To determine

Compute net tax payable or refund due for Person A and Person B for 2018.

Answer 8

(1)

Expert Solution

Explanation of Solution

Compute net tax payable or refund due for Person A and Person B for 2018:

Particulars	Amount ($)
Person B's salary	$62,100
Person A's salary	$58,000
Interest income	$2,750
Adjusted gross income	$122,850
Less: Itemized deductions (1)	($36,486)
Taxable income	$86,364
Tax from 2018 Married filing Joint tax table	$10,879
Less: Prepayments and Credits
Income tax withheld ($5,300 + $4,500)	($9,800)
Dependent tax credit (2) (2 × $500)	($1,000)
Net tax payable (or refund due) for 2018	$79

Table (1)

Therefore, net tax payable for 2018 is $79.

Note: The taxpayer is not subjected to the AMT.

Working note (1): Compute the total itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$4,500
Doctor bill for Person S paid in 2018 for services in 2017	$7,600
Operations for Person S	$8,500
Prescription medicines for Person S	$900
Hospital expenses for Person S	$3,500
Total medical expenses	$25,000
Less: Reimbursement received in 2018	($3,600)
Less: 7.5% of $122,850 AGI	($9,214)
Medical expenses deductible in 2018		$12,186
Taxes:
State income taxes ($3,100 + $2,950 + $900)	$6,950
Property taxes on residence	$5,000
	$11,950
Overall limit on state and local taxes		$10,000
Qualifies interest on home mortgage		$8,700
Charitable contributions: (3)
Church contribution	$5,000
Tickets to charity dinner dance	$250
(Only the excess of the ticket price of $300 over the cost of comparable entertainment of $50 is deductible)
used clothing donated (limited to fair market value)	$350	$5,600
Total itemized deductions		$36,486

Table (2)

Therefore, total itemized deductions $36,486.

Note: The expenses for Person A’s uniforms and laundry ($850 + $566) and Person B’s professional journals and dues ($400 + $741) are employee business expenses (and miscellaneous itemized deductions). The TCJA of 2017 suspends the deduction for miscellaneous itemized deductions from the year 2018 through 2025.

Person A and Person B would opt for itemize their deductions since total itemized deductions exceed the standard deduction of $24,000 for the year 2018 for married persons filing jointly.

Working note (2): Determine the dependent tax credit:

In addition to Person B’ son, Person J, Person B’s father, Person S, eligible as a dependent. Person C cannot be asserted as a dependent as she is not below age of 24 (as a result she is not a eligible child) and has too much income to be a qualifying relative. Person J does not eligible for the child tax credit because he is not under age 17. But both Person J and Person B eligible for the dependent tax credit of $500.

Working note (3): Determine charitable contribution:

The $400 specified to a required family via neither a crowd-funding site nor the $65 given to homeless individuals eligible for a charitable contribution as the amounts were not given to qualified organizations.

Answer 9

(1)

Expert Solution

Answer 10

(1)

Expert Solution

Answer 11

Expert Solution

Answer 12

(2)

To determine

Compute the taxable income and tax liability for 2018 in the given situation.

(2)

Expert Solution

Explanation of Solution

Compute the taxable income and tax liability for 2018 in the given situation:

Particulars	Amount ($)
Person B's salary	$88,000
Interest income ($32,000 + $2,750)	$34,750
Adjusted gross income	$122,750
Less: Itemized deductions (4)	($30,794)
Taxable income	$91,956
Tax liability from 2018 Married, filing jointly tax rate schedule	$12,109

Table (3)

Therefore, Tax liability from 2018 married, filing jointly tax rate schedule is $12,109.

Working note (4): Determine the itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$9,769
Estimated costs for Person A ($15,400 − $6,400)	$9,000
Less: 10% of $122,750 AGI	($12,275)	$6,494
Taxes:
State income taxes ($3,100 + $4,000)	$7,100
Property taxes on residence	$5,100
	$12,200
Overall limit on state and local taxes		$10,000
Qualified interest on home mortgage		$8,700
Charitable contributions		$5,600
Total itemized deductions		$30,794

Table (4)

Therefore, total itemized deductions $30,794.

Answer 13

(2)

To determine

Compute the taxable income and tax liability for 2018 in the given situation.

Answer 14

(2)

Expert Solution

Explanation of Solution

Compute the taxable income and tax liability for 2018 in the given situation:

Particulars	Amount ($)
Person B's salary	$88,000
Interest income ($32,000 + $2,750)	$34,750
Adjusted gross income	$122,750
Less: Itemized deductions (4)	($30,794)
Taxable income	$91,956
Tax liability from 2018 Married, filing jointly tax rate schedule	$12,109

Table (3)

Therefore, Tax liability from 2018 married, filing jointly tax rate schedule is $12,109.

Working note (4): Determine the itemized deductions:

Particulars	Amount ($)	Amount ($)
Medical expenses:
Medical insurance premiums	$9,769
Estimated costs for Person A ($15,400 − $6,400)	$9,000
Less: 10% of $122,750 AGI	($12,275)	$6,494
Taxes:
State income taxes ($3,100 + $4,000)	$7,100
Property taxes on residence	$5,100
	$12,200
Overall limit on state and local taxes		$10,000
Qualified interest on home mortgage		$8,700
Charitable contributions		$5,600
Total itemized deductions		$30,794