Bart and Elizabeth Forrest are married and have no dependents. They have asked y
ID: 2549673 • Letter: B
Question
Bart and Elizabeth Forrest are married and have no dependents. They have asked you to advise them whether they should file jointly or separately in 2017. They present you with the following information:
If they file separately, Bart and Elizabeth will split the real estate tax and mortgage interest deductions equally.
If an amount is zero, enter "0". Do not round your intermediate computations and round your final answers to the nearest dollar.
a. Complete the comparison table through AGI, then compute the total amount of the itemized deductions on the separate schedule before completing the remainder of the table.
Bart and Elizabeth Forrest
Comparison of Joint and Separate Tax Liabilities
Tax Year 2017
b. Complete Bart’s Schedule A for 2017. Assume that Bart and Elizabeth file separate returns. Bart’s Social Security number is 123-45-6789
c. Complete the letter to Bart and Elizabeth.
Bart Elizabeth Joint Salary $38,000 Business net income $110,000 Interest income 400 1,200 $2,200 Deductions for AGI 2,400 14,000 Medical expenses 10,427 3,358 State income tax 800 1,800 Real estate tax 3,800 Mortgage interest 4,200 Unreimbursed employee expenses 1,200Explanation / Answer
Wages
Business
Interest Income
Gross Income
Deduction For AGI
AGI
Medical Expense
(10427 – (36000 * 0.10)
State Tax
Real Estate
Mortgage Interest
Unreimbursed employee expenses
1200 - 720
Total Itemised Deduction
Taxable Income
Tax:
932.5 + (23893-9325) * 0.15
932.5 + 4293.75 + (91400-37950) * 0.25
1335 + 5617.5 + (123200-50800) * 0.25
38,000
400
38,400
(2,400)
36,000
(6,827)
(800)
(1,900)
(2,100)
(480)
(12,107)
23,893
3,117.7
110,000
1,200
111,200
(14,000)
97,200
-
(1,800)
(1,900)
(2,100)
-
(5,800)
91,400
18,588.75
38,000
110,000
2,200
150,200
(16,400)
133,800
-
(2,600)
(3,800)
(4,200)
-
(10,600)
123,200
25,052.5
Wages
Business
Interest Income
Gross Income
Deduction For AGI
AGI
Medical Expense
(10427 – (36000 * 0.10)
State Tax
Real Estate
Mortgage Interest
Unreimbursed employee expenses
1200 - 720
Total Itemised Deduction
Taxable Income
Tax:
932.5 + (23893-9325) * 0.15
932.5 + 4293.75 + (91400-37950) * 0.25
1335 + 5617.5 + (123200-50800) * 0.25
38,000
400
38,400
(2,400)
36,000
(6,827)
(800)
(1,900)
(2,100)
(480)
(12,107)
23,893
3,117.7
110,000
1,200
111,200
(14,000)
97,200
-
(1,800)
(1,900)
(2,100)
-
(5,800)
91,400
18,588.75
38,000
110,000
2,200
150,200
(16,400)
133,800
-
(2,600)
(3,800)
(4,200)
-
(10,600)
123,200
25,052.5
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