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Cindy (age 40) and Don (age 39) Cowen are married. Don's 17 year old son from a former marriage lives with them. They also fully support Cindy's mother, Ella who lives with them. Ella's only income during 2013 was interest of 2,500. Cindy works as a retail manager and Don is a self-employed electrician. Their 2013 tax and other information are as follows:

Salary - Cindy

50,000

Federal withholding on salary

18,000

State withholding on salary

2,000

Interest income on bonds:

     Issued by Webster Bank

3,000

     State of Connecticut

2,000

Savings account interest

700

Dividends from RGR, Inc. (all are non-qualified)

5,000

Value of employer provided medical insurance

3,000

Value of premiums for $50,000 of group term life insurance

500

Cindy's mother's medical expenses paid by Cindy

9,500

Inheritance from Cindy's father's estate

7,500

Personal loan obtained to pay credit card debt

20,000

Interest paid on personal loan

1,000

Child support received from Don's ex-wife

8,000

Alimony paid to Don's ex-wife

   3,400

Donations to church

Real Estate taxes on primary residence                            

1,500

4,500

Mortgage interest on primary residence (<$1M)

3,000

Don's business revenues

40,000

Don's business expenses

16,750




Required: Determine the following for the Cowen's 2013 tax year:

  1. Exclusions (if any)                                                         $ ___________
  1. Gross income (excluding Don's SE income)                       $ ___________
  1. Don's net self-employment income                                  $ ___________
  1. Adjusted gross income                                                  $ ___________
  1. Itemized deduction or standard deduction amount            $ ___________
  1. Deduction for exemptions                                              $ ___________
  1. Taxable income                                                            $ ___________
  1. Income tax liability                                                        $ ___________
  1. Self-employment tax liability                                           $ ___________
  1. Net tax due/(refund)                                                    $ ___________

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9945205

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