Question

Fill in the table below, using the information on this handout, based on what is best for the client. Bill and Judy Dodge are married,

and are each 35 years old. They have three children, with ages as of Dec. 31, 2019 as listed: Mary, age 5, Peter, age 2, and Lucy, age 4

months.

Assume they did not itemize for their 2018 federal income tax return. The W2 table is for the 2019

income tax year.

Assume tax laws in 2019 are as described in the textbook. If no information is given about something, assume

zero, e.g., zero contributions to an IRA. Your answers should be what is best for the family.

A. Wages, salaries, tips, etc.

1040 Line 1=

B. Taxable refunds

1040 Line 1 Schedule 1=

C. Business income or loss. From Schedule C.

1040 Line 3 Schedule 1=

D. Any other items in 1040 Lines 2a-7a that apply? Assume zero.

E. 2019 Federal gross income $ =

1040 Line 7b =

F. Any adjustments to gross income, Schedule 1, Lines 10-21

Assume that only Schedule 1, Line 14 applies: Deductible part of

self-employment tax

1040 Line 8a =

G. 2019 Federal adjusted gross income $ =

1040 Line 8b=

H. Filing status = (single/married filing jointly, household head)

(circle 1)

I. Enter standard deduction (SD) $ =

Enter itemized deductions (ID) and list below =

1040 Line 9 =

J. Qualified business income deduction

(20% of business income from Schedule C)

1040 Line 10 =

K. 2019 Federal taxable income $ =

1040 Line 11b =

L. 2019 marginal tax rate (bracket)

M. income tax before credits for 2019 $=

1040 Line 12b =

N. Nonrefundable portion of child and family tax credit Line 13a =

Other nonrefundable credits in Schedule 3

Credit for child care expenses =

Retirement savings credit = 1040 Line 13b=

O. Income tax after non-refundable credits

1040 Line 14 =

P. Other taxes, including self-employment tax

1040 Line 15 =

Q. Total tax (income tax before credits + self-employment tax)

1040 Line 16 =

R. Federal Income Tax withheld

1040 Line 17 =

S. Line 17+Line 18e. T

otal payments (assume no refundable

credits)

Line 19 =

T. If Line 19 is more than Line 16, subtract Line 16 from Line 19.

Amt overpaid.

Line 20 =

V. If Line 19 is less than Line 16, subtract Line 19 from Line 16. Amt

owe.

Line 23 =

2

Case 8 information. (Keep this page.)

Use 2019 tables for all calculations. They received a state income tax refund of $1,000 in 2019.

Charitable contributions =$2,000. Medical expenses not covered by insurance = $900. Real estate taxes paid in

2019 = $7,800. Interest paid on home mortgage (taken out for a home purchase) in 2019 = $12,200.

W2 forms

Bill

Judy

Box 1 wages

110,000

0

Box 3 & Box 5 wages

120,000

0

Box 2 federal income tax withheld in 2019

11,000

0

Box 17, state income tax withheld in 2019

4,500

0

Box 19, local income tax withheld in 2019

0

0

Box 4, Social Security tax withheld in 2019

7,130

0

Box 6, Medicare tax withheld in 2019

1667.5

0

Bill had $10,000 withheld from his paychecks for elective contributions to his employer’s 401k plan, and his

employer contributed an additional $5,000. That is why his Box 1 wage is $10,000 less than his Box 3 & Box

5 wage.

Judy started a counseling business in January, 2019. She paid rent of $9,000 in 2019, and utilities of $5,000.

Advertising and other market costs in 2019 amounted to $10,000. She bought furniture costing $6,000 for her

office. She will “expense” this purchase, claiming it as a current expense on the Schedule C for her business.

The gross revenue for her business in 2019 was $40,000.

There were no childcare expenses, because Judy’s mother took care of the children.

Answer 1

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