Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their
ID: 2457187 • Letter: A
Question
Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their social security numbers are 123-45-6789 and 111-11-1111, respectively. Alice's birthday is September 21, 1967, and Bruce's is June 27, 1966. They live at 473 Revere Avenue, Lowell, MA 01850 (employer identification number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (employer identification number 11-1111111). The following information is shown on their Wage and Tax Statements (Form W-2) for 2014.
Line: Description: Alice : Bruce
1 Wages, tips, other compensation Alice: $58,000 Bruce: $62,100
2 Federal income tax withheld Alice: 4,500 Bruce: 6,300
3 Social Security wages Alice: 58,000 Bruce: 62,100
4 Social Security tax withheld Alice:3,596 Bruce:3,850
5 Medicare wages and tips Alice:58,000 Bruce:62,100
6 Medicare tax withheld Alice:841 Bruce:900
15 State Massachusetts Massachusetts
16 State wages, tips, etc. Alice: 58,000 Bruce: 62,100
17 State income tax withheld Alice: 2,950 Alice: 3,100
The Byrds provide over half of the support of their two children, Cynthia (Born January 25, 1990, Social Security number 123-45-6788) and John (born February 7, 1994, Social Security number 123-45-6786). Both children are full-time students and live with the Byrds except when they are away at college. Cynthia earned $4,200 from a summer internship in 2014, and John earned $3,800 from a part-time job.
During 2014, the Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (Born March 6, 1938, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $800,000 on December 28.
The Byrds had the following expenses relating to their personal residence during 2014:
Property taxes $5000
Qualified interest on home mortgage $8700
Repairs to roof $5750
Utilities $4100
Fire and theft insurance $1900
The Byrds had the following medical expenses for 2014:
Medical insurance premiums $4500
Doctor bill for Sam incurred in 2013 and not paid until 2014 $7600
Operation for Sam $8500
Prescription medicines for Sam $900
Hospital expenses for Sam $3500
Reimbursement from insurance company, received in 2014 $3600
The medical expenses for Sam represent most of the 60% that Bruce contributed towrd his father's support.
Other relevant information follows:
-When they filed their 2013 state return in 2014, the Byrds paid additional state income tax of $900.
-During 2014, Alice and Bruce attended a dinner dance sponsored by the Lowell Police Disability Association (a qualified charitable organization). The Byrds paid $300 for the tickets. The cost of comparable entertainment would normally be $50
-The Byrds contributed $5,000 to Lowell Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of $350) to the Salvation Army. All donations are supported by receipts, and the clothing is in very good condition.
-In 2014, the Byrds received interest income of $2,750 which was reported on a Form1099-INT from Second National Bank
-Alice's employer requires that all employees wear uniforms to work. During 2014, Alice spent $850 on new uniforms and $566 on laundry charges
-Bruce paid $400 for an annual subscription to the Journal of Franchise Management and $741 for annual membership dues to his professional association
-Neither Alice's nor Bruce's employer reimburses for employee expenses
-The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax
-All members of the Byrd family had health insurance coverage for all of 2014.
- Alice and Bruce paid no estimated Federal income tax. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campaign fund.
Question: Compute net tax payable or refund due for Alice and Bruce Byrd for 2014. If they have overpaid, they want the amount to be refunded to them. If you use tax forms for your computations, you will need Forms 1040 and 2106 and Schedules A and B.
Explanation / Answer
Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their
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