Show all components of your work for partial credit review.
Steven (age 40) and Lori (age 39) Post are married. Lori works as a retail manager and Steven is a self-employed architect (he does not qualify for the QBI Deduction) and does not maintain a home office. Their 2020 tax and other information are as follows:
Salary – Lori $90,000
Federal income tax withholding on a salary of $18,000
CT State Income Tax withholding on salary $ 6,000
CT Municipal bond interest $ 2,000
Savings account interest $ 1,500
Inheritance from Steven’s father’s estate of $ 7,000
Dividends from RGR, Inc (all are non-qualified) $ 4,000
Interest paid on Loris’s personal car loan of $ 2,000
Child support paid to Steven’s ex-wife $10,000
Alimony was paid to Steven’s ex-wife. Divorced in 2010 $ 6,000
Qualified Out of Pocket Medical Expenses $ 5,000
Donations to Church $ 2,500
Real Estate Taxes on primary residence $ 5,000
The mortgage interest paid on primary residence (<$1M) $ 8,000
Steven’s business revenue is $60,000
Steven’s business expenses are $15,000
Required: Using the tax formula format, determine the following for the Post’s 2020 tax year (show all calculations):
All Income $___________
Income Exclusions (if any) $ ___________
Gross income (including Steve’s SE profit) $ ___________
Deductions For AGI $ ___________
Adjusted gross income $ ___________
Itemized deduction or standard deduction amount $ ___________
Qualified Business Deduction $ ___________
Taxable income $ ___________
Income tax liability $ ___________
Self-employment tax liability $ ___________
Net tax due or refund (show calculation) $ ___________
Remember: This is for the 2020 tax year. You must use appropriate 2020 amounts for standard deduction, exemptions, and tax calculations. You are not required to use tax forms. SHOW ALL CALCULATIONS
MidtermExam-October20211.doc
[removed]