Michigan state tax:The following information relates to David and Mary Hopkins for tax year 2014. Please use this information to provide answers to the questions on the separate page. You will submit the "answer page" only.
David (50) and Mary (49) are married and file a joint tax return. David is the office manager for an accounting firm and Mary is the manager of a restaurant in their town. David and Mary have 3 children: Kim (10), Karen (17) and Karl (25) who lived with them all year. Kim is in elementary school. Karen is a high school senior. Karl is in graduate school and commutes to classes. Karen earned $4,300 as a waitress and Karl earned $3,100 as a sailing instructor during the summer and $2,500 as a graduate research assistant during the regular school year. David and Mary furnish 60% of the support of David's aunt, Ann, who lived alone in her own residence during the year. Ann provided the rest of her support from her non taxable Social Security benefits and $4,000 of interest from a City of Grand Rapids, MI bond. Ann passed away in April and David was the beneficiary on her life insurance policy and received $100,000 in life insurance proceeds on May 2nd. The Hopkins had the following income and expenses during the 2014 tax year:
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ITEM
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AMOUNT
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Property taxes
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$5,210
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Interest on home mortgage
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6,308
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Repairs to the furnace of their home
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750
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Utilities for their home
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3,500
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Fire and theft insurance for their home
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1,500
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Medical insurance premiums
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12,530
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Doctor for Ann (from 2013 paid in 2014)
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2,410
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Operation for Ann
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9,000
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Prescription medicine for Ann
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3,600
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Hospital expenses for Ann
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12,700
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Reimbursement from medical insurance (received in 2014 for 2014 expenses)
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5,600
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Additional state income tax paid when return filed
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1,700
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Tickets to fashion show for the Youth Association (qualified charitable organization) comparable cost would be $75.
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325
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Contribution to Lutheran Church
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7,000
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Used clothing to Salvation Army (cost $1,600)
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FMV $470
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Received interest income from National Bank
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1,740
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Received interest income from Providence, RI bonds
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2,500
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Uniforms for Mary (required by employer)
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460
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Fee paid to have tax return prepared
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380
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David donated 20 hours of services to the church
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FMV of services 1,000
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David's subscription to Office Management Quarterly
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230
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Laundry for required uniforms
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270
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Mary's subscription to "Journal of Franchise Management"
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300
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David's W-2 income
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117,000
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David's state income tax withheld
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6,950
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Mary's W-2 income
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62,900
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Mary's state income tax withheld
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4,100
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Answer Sheet
Please provide your answers to the following problems.
Number of exemptions allowed for 2014 for the Hopkins
Total Gross Income for 2014 for David and Mary Hopkins
Allowable miscellaneous itemized deductions for the Hopkins for 2014 prior to any limitations
Allowable medical deduction for the Hopkins for 2014 prior to any limitations
Allowable interest deduction for the Hopkins for 2014
Allowable taxes deduction for the Hopkins for 2014
Allowable charitable contribution deduction for 2014 for the Hopkins
Assume the Hopkins Taxable Income was $230,000. Tax liability for 2014
Assume the Hopkins Taxable Income was $75,900. Tax liability for 2014
Assume the Hopkins' Adjusted Gross Income is $168,000, they are entitled to 7 exemptions, and their itemized deductions after all limitations are $9,500. What is their Taxable Income