During 2018, Bill, 50 years old, eamed a salary of $87,000 as an executive at Fa

Question

During 2018, Bill, 50 years old, eamed a salary of $87,000 as an executive at Fast Corm. Bill received the following interest during 2018: $400 on City of New York Bonds S200 on a money market account $210 on a loan made to his brother. Bill's employer, Fast Corp, provides all of their employees with S100,000 of group term life insurance on a non-discrimatory basis. Bill had invested in an annuity that started making monthly payments of $200 in February of 2018 when he turned 50. He had made an initial investment of S30,000 in the annuity Bill spent one week serving on jury duty and received $50. Bill's Aunt Sara gave him a gift of $15,000 for his birthday during the year Bill paid his ex-wife Mary S6,000 in alimony during the year. Bill received a refund of federal income taxes withheld during the prior year of $1,200 and a state tax refund of $140. Bill received S1000 of qualified dividends from DST Corporation and S1,400 of ordinary dividends from Lay Corporation. Bill's itemized deductions totaled S13,000 and had $9,000 withheld for federal income taxes during the year. Bill's father had dies and he received S500,000 in life insurance proceeds in 2018. In 2016, Bill was in a car accident. During 2018, Bill received a judgment from a personal injury action related to the accident. He received S120,000 as a recovery for personal injuries and $70,000 in punitive damages. Calculate Bill's tax due or refund for 2018.

Explanation / Answer

Workings / Notes:

1. Qualified dividends - I have assumed that the investment was held by Bill for the requisite period

2. Calculation:

3. Tax Calculation:

Income Salary from Fast Corp.            87,000.00 Interest from Money Market                  200.00 Interest from loan made to Brother                  210.00 Interest from City of New york Bonds                  400.00 Annuities               2,123.61 Receipt from Jury duty                     50.00 Gift from Aunt Sara            15,000.00 Refund of federal taxes               1,200.00 Refund of State taxes                  140.00 Qualified dividends from DST Corp               1,000.00 Ordinary dividends from Lay               1,400.00 Group term life Insurance                  138.00 Life Insurance Proceeds          500,000.00 Personal Injury recovery          120,000.00 Punitive damages            70,000.00 Income          798,861.61 Less: Exclusions Municial bonds Interest (City of New york Bonds)                  400.00 Gift from Aunt Sara            15,000.00 Life Insurance Proceeds          500,000.00 Personal Injury recovery          120,000.00 Total Exclusions          635,400.00 Gross Income          163,461.61 Less: Deductions for AGI Alimony paid               6,000.00 Adjusted Gross Income          157,461.61 Less: Itemized deductions            13,000.00 Less: Personal and Dependancy Exemptions                            -   Taxable Income          144,461.61 Tax on taxable Income            33,200.00 Less: Federal Witholding               9,000.00 Tax Payable            24,200.00

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