A. The couple’s filing status should be Married Filing Jointly. A1. Married Filing Jointly would be the most beneficial for this couple because it will allow them to stay at a lower tax bracket and also qualify to take a higher standard deduction and higher deduction on the sale of their home than they would as individuals. The family can claim 5 exemptions: 1. Spouse A can take a personal exemption 2. Spouse B can take a personal exemption 3. The 10 year old is classified as a qualifying child and can be claimed as a dependent because they under 19 years of age and lived with the parents for the full year 4. The high school junior is classified as a qualifying child because he is under 19 years old and although Spouse B …show more content…
A2e. Passive activity is an activity in which an investor can earn profit from an activity in which he/she does not physically participate, including rentals and limited partnerships. In this scenario the couple has one rental property from which they received revenue that can be classified as passive income. The passive income has generated a net loss of $6,200. Since the couple has hired a realty company to manage their rental property then the loss must be carried over to the following year. These losses are reported on Form 8582. The $44,000 profit earned from the sale of the third rental property also needs to be reported but will be taxed as Long Term Capital Gains and will be entered as “Other gains or (losses)” using Form 4797. A3. The Income that will be reported for this couple will include the following: -Spouse B’s $8,000/month for 11 months of income from work because these are taxable wages that are paid to Spouse be for employment. - Spouse A’s partnership share of income is reported because in a partnership the partners are to report their share of their business on their individual return. - Spouse A’s $2,000 W-2 from the city park district is reported because as with spouse B’s wages, this is reported because these are wages paid to them for employment. - Dividends received from Spouse A’s investment into Company E is also included as income since the IRS states that dividends from investments is also taxable. -
IRC §702(a) emphasizes that partners must report their distributive shares of partnership income. §704(a) says that the partnership agreement determines the partner’s distributive shares of income, gain, loss, deductions, and credits, pursuant to the limitations set forth in §704(b). Such limitations were calculated and phrased in terms of the “tax avoidance test” prior to 1976. This test stated that allocations of income, gain, loss, deductions, or credits would be disregarded if the principal purpose for said allocations was tax avoidance per §704(b)(2). In 1976, a new “substantial economic effect” test was adopted in 1976 to determine the limitations relating to a partner’s distributive share. §702(a)(9) requires an allocation of bottom line income or loss to have economic substance that reflects the actual division of such items when viewed from an economic rather than a tax viewpoint.
v. Use the Example_Instructions_1040EZ's tax table on pages 27-35 to find the amount that Jessie Robinson owes. TIP: The Example_Instructions_1040EZ is in your Section_2 folder.
In this example ONLY for calculating Property in Capital Accounts/Tax Basis there are (4) partners with a 25% share.
The recommended tax filing status for this family is Married Filing Jointly. The reason I would recommend this filing status is that there are three children that are qualifying children, but the college freshman is not under the age of 17 so that child does not qualify for the child tax credit. Spouse B’s
Taxable earnings are: Spouse A's income from the partnership and the part time soccer referee job is included. Spouse B's earned income from the job as a controller counts as taxable income. The quarterly dividend from company E also falls under the income heading on the 1040 form. The capital loss is also included under income. The interest from the municipal bond is considered tax exempt for federal standards.
On June 1, 2016, exactly three months ago, Marianne and Dory received an audit notice for Wise-Holland’s 2011 tax return because some deductions taken were
From the information that was provided, the income was derived from the business and this gross income is taxable pursuant to Code§1.61-3(a). He is subject to self-employment tax, since the total amount of income that will come through to his personal tax income of half of the self-employment tax liability.
Working under the assumption that Adrian is a cash basis taxpayer, one can refer to Treasury Regulation sec. 1451-1(a), which states that under the cash receipts and disbursements method of accounting, such an amount is includible in gross income when actually or constructively received.
The reason that using the married filing jointly status is more advantageous for the couple is that taxes will be lower than if they filed as married filing separately. Filing jointly provides more tax benefits and the tax rate is generally lower.
Tara may have assumed she was receiving more than what she got because like most people who do math they would multiply how much they make by the amount of time they have worked and will immediately forget about taxes which will differ in states. Hopefully she would not repeat that mistake.
a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above?
Paul, age 24, and Jessica, age 22, are married and want to file a joint return.
i. The federal income tax withholding information from Jessie's W-2 form. TIP: This is the amount from question 7c above. Social Security tax and Medicare tax are not important to the 1040EZ form.
The other option afforded to the Ouray’s is to file separately as a married couple. Filing separately can be advantages under special circumstances. However, if the couple was to file separately, there are several restrictions. First being, that if one spouse cannot demonstrate more than one-half of a child’s support is provided by them, a multiple-support agreement must be filed. Next, if one taxpayer itemizes their deductions they must both take itemized deduction and same goes if one person takes a standard deduction, the other must as well. If filing status was to be separate, neither spouse can claim the earned income credit and the credit for child and dependent care expenses. Next, no deduction is allowed for the interest paid on educations loans, and only $1,500 of excess capital losses can be claimed by each person.
Under Family Code Section 3900, the legislation states that the father and mother of a minor child have an equal responsibility to support their child in the manner suitable to the child’s circumstances as well as the parent’s circumstances and station in life. Family Code 3901(a) followed by Section 3900 that the duty of support of a parent continues to unmarried child who has reached the age of 18 years, is a full-time high school student, and who is not self-supporting, until the time the child