Question

During all of 2018, Mr. and Mrs. Clay lived with their four children (all are under the age of 17). They provided over one-half of the support for each child. Mr. and Mrs. Clay file jointly for 2018. Neither is blind, and both are under age 65. They reported the following tax-related information for the year: (Use the tax rate schedules)

Salary income $125,000

Prize from local radio station 1,500

Medical expenses (no health insurance) 4,000

Real estate taxes 4,200

Alimony paid by Mr. Clay (divorced in 2015) 12,000

State income taxes withheld in 2018 1,800

State income taxes paid with 2018 tax return (return was filed in April, 2019) 1,500

Federal income tax withholding 7,500

Qualified home mortgage interest (acquisition debt of $300,000) 15,000

Charitable contributions 4,000

A. What is the Clays' taxes payable or (refund due) (ignore the alternative minimum tax)?

B. What is the Clays' tentative minimum tax and alternative minimum tax?

Answer 1

Salary Income	$125,000
Price from local radio station	$1,500
Total income	$1,26500
Less: Alimony	$12,000
Adjusted Gross Income	$1,14500
Itemized deductions:
Medical expenses are reduced by 7.5% of AGI	8587.5	114500*0.75
here there is no allowable deduction (4000-8587) <0
Deductible taxes :
Real estate taxes	4200
State taxes withheld	1800
Mortgage interest	11000
Charitable contributions	4000
Total Itemized deduction	21000
personal exemptions is deducted	22200	6*3700
Taxable income	71300	114500-21000-22200
Tax on income	10075
by the new IRS tables for 2011
child tax credit for each eligible child	4000	4*1000
amount of federal income tax withheld in 2011 to be deducted	7500
leaves a refund due	1425	10075-4000-7500