It’s the finish of the tax-yr, and Kate and Sam Smith want your Help finishing pages 1 and 2 of Schedule 1040 and Schedule A.
Kate Smith (SS # 555-55-5555)
Sam Smith (SS# 444-44-4444)
33 Oak Road Drive
San Diego, California 91911
The taxpayers are 52 years outdated, file Married Submitting Collectively, and have two kids:
Elizabeth Smith (SS # 333-33-3333)
Jonathan Smith (SS# 222-22-2222).
For this drawback, assume their gross revenue is $185,300.
This yr Kate bought a brand new job, and the Smiths moved to a brand new metropolis. The brand new job was situated inside the similar state about 650 miles away from their outdated home. Earlier than the transfer, the household went on a home searching journey that value them $700. In addition they employed a shifting firm for $2,800. On their solution to their new home they spent $50 on meals, and $75 on a lodge room. In addition they stopped by an amusement park and spent $80 on tickets for the day.
The Smiths paid $12,000 in curiosity on their residence mortgage this yr, and $2,500 in actual property taxes on their new residence. In addition they paid $1,200 in private bank card curiosity, and Kate paid $850 in curiosity on scholar loans.
Sam was hospitalized with a coronary heart situation this yr, which required him to endure surgical procedure. The Smiths incurred $25,000 in medical bills on account of Sam’s sickness. Of this quantity, $18,000 was reimbursed by the insurance coverage firm.
Throughout the yr the Smiths contributed $1,500 money to the Salvation Military. Earlier than their transfer, the household donated garments and furnishings that that they had bought for $650 to Goodwill. On the time of donation the gadgets have been value $300. In addition they gave some outdated child furnishings to their buddies that was valued at $150.
Sam Smith paid $200 in union dues for the yr, and the household pays $250 for tax return preparation companies.
Reply Key – After TCJA
Taxable revenue is $161,300, computed as follows:
Gross Earnings $ 185,300
AGI $185,300
Itemized Deductions:
Medical Bills zero
Mortgage Curiosity 12,000
Actual Property Taxes 2,500
Charitable Contributions 1,800
16,300**
Commonplace Deduction:
Married Submitting Collectively $24,000
Taxable revenue $ 161,300
Notes:
1. Not one of the shifting bills are deductible.
2. Scholar mortgage curiosity is just not deductible as a result of the Smith’s AGI exceeds the edge quantity of revenue.
three. Private bank card curiosity is just not deductible.
four. Medical bills don’t exceed the ground limitation of 10 % of AGI so are non-deductible.
5. The Smith’s can deduct the $1,500 money donation, and the $300 of things contributed to Goodwill. They can’t deduct the furnishings given to their buddies.
6. Union dues of $200 and tax return preparation charges of $250 are not deductible.
** Complete itemized deductions are usually not as excessive as the usual deduction. Subsequently, this yr the shopper ought to take the usual deduction.
