Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses. Bruce decides to put $5,500 into a Traditional IRA. Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm: Utilities: $2,000 Office Rent: $14,000 Self-Employment Tax: $5,000 Salary for her secretary: $20,000 Fines/Penalties: $8,000 Payroll Taxes (Employer Portion): $1,000 Business Meals: $2,000 Bribe to police officer to forgive parking violation $1,500 Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction. Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $30,000. The home is located in a federally declared disaster area. They also have the following personal expenses during the year: Medical Expenses: $19,750 State & Local Taxes $4,000 Federal Income Tax Payments: $6,000 The personal exemption amount for the tax year is: $0 The standard deduction amounts are listed below: Single: $12,950 Head of Household: $19,400 Married Filing Jointly: $25,900 Questions: 1. What amount of Amanda's gross buiness revenue is included in Gross Income? _____________________ 2. How much of a deduction does Bruce get ofr the contribution to his IRA? ____________________ 3. Bruce and Amanda's Gross Income: __________________ 4. What is the total deductible amount of Amanda's busines expenses? ________________________ 5. Bruce and Amanda's Adjusted Gross Income: ____________________ 6. Whatis the deductible amoun tof their medical expenses after limitations? ________________________ 7. What is the deductible amount of their deductible casualty loss after limitations? ___________________ 8. What is the total deductible amount of their allowable itemized deducitons after limitations? (Do not include QBI deduciton for this answer) __________________________ 9. What is the amount of their Qualified Business Income deduction? ______________________ 10. Bruce and Amanda's Taxable Income: _____________________
Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses.
Bruce decides to put $5,500 into a Traditional IRA.
Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm:
- Utilities: $2,000
- Office Rent: $14,000
- Self-Employment Tax: $5,000
- Salary for her secretary: $20,000
- Fines/Penalties: $8,000
- Payroll Taxes (Employer Portion): $1,000
- Business Meals: $2,000
- Bribe to police officer to forgive parking violation $1,500
Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction.
Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $30,000. The home is located in a federally declared disaster area.
They also have the following personal expenses during the year:
- Medical Expenses: $19,750
- State & Local Taxes $4,000
- Federal Income Tax Payments: $6,000
The personal exemption amount for the tax year is: $0
The standard deduction amounts are listed below:
- Single: $12,950
- Head of Household: $19,400
- Married Filing Jointly: $25,900
Questions:
1. What amount of Amanda's gross buiness revenue is included in Gross Income? _____________________
2. How much of a deduction does Bruce get ofr the contribution to his IRA? ____________________
3. Bruce and Amanda's Gross Income: __________________
4. What is the total deductible amount of Amanda's busines expenses? ________________________
5. Bruce and Amanda's Adjusted Gross Income: ____________________
6. Whatis the deductible amoun tof their medical expenses after limitations? ________________________
7. What is the deductible amount of their deductible casualty loss after limitations? ___________________
8. What is the total deductible amount of their allowable itemized deducitons after limitations? (Do not include QBI deduciton for this answer) __________________________
9. What is the amount of their Qualified Business Income deduction? ______________________
10. Bruce and Amanda's Taxable Income: _____________________
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