,John E.Owens and Sally A.Owens, each age 42 married on September 7,2011.John and Sally will file a joint return for 2011.
John was divorced from Joyce in March 2010. Under the divorce agreement, John is to pay Joyce $ 1,000 per month for the next 10 years or until Joyce's death, whichever occurs first. John pays Joyce $ 12,000 in 2011. in addition, in January 2011, John pays Joyce $ 50,000, which is designated as being for her share of the marital property. Also, John is responsible for all prior year's income taxes.
John's total wage compensation for 2011 is $ 190,000. His employer withheld $ 12,000 for the Federal income taxes and $ 3,400 for state income taxes. The following amounts were withheld for FICA taxes:$4,485 ($106,800 X 4.2%)for Social Security and $2,755 ($190,000 X 1.45%)for Medicare.
Sally recently graduated from law school and is employed by Legal Aid Society, Inc.,as a public defender.She received a salary of $40,000 in 2011.Her employer withheld $5,700 for the Federal income taxes and $2,300 for the state income taxes. The following amount were withheld for FICA taxes:$1,680.00 ($40,000 X 4.2%)for Social Security and $580($40,000 X 1.45%) for Medicare.
Sally has $1,500 in dividends on Yellow Corporation stock she inherited. Sally receives an $850 refund on 2010 state income taxes. She used the standard deduction on her 2010 Federal income tax return. Alfred receives $1,300 refund on his 2010 state income taxes.He itemized deduction on his 2010 Federal income tax return. John and Sally pay $4,800 interest and $1,450 property taxes on their personal residence in 2011. Their charitable contribution total $2,600 (all to their church).
compute John and Sally's taxable income for 2011.