1040 Tax problem

Tax Form Problem 1 - Due 2/11/14 Covers forms 1040.

FACTS: Tom and Geri Jones are married. They live at 3000 N. Maryland Ave., Milwaukee, WI 53211. Tom’s social security number is 123-42-1234 and Geri’s is 987-65-4321. They both want $3 to go to the presidential fund. Tom and Geri have one child, Jack, age 5. His social security number is 112-23-3445. Presented below are amounts needed to prepare their 2011 tax return:

Wages 75,250

Interest received on savings account 850

Tax exempt interest (Put on line 8b) 250

Ordinary Dividends 1500

Short-term capital loss on the sale of stock (5,500)

Long-term capital gain on the sale of stock 600

Unreimbursed medical expense 5,300

Interest paid on credit cards 150

Mortgage interest paid 5,925

Alimony paid to Tom’s first wife (SSN 997-65-4321) 5,600

Interest paid on car loan 470

Job related expenses 475

Charitable contribution made 1,100

Real estate property taxes paid 4,500

IRA deduction 5,000

Wisconsin taxes paid 1,800

Child tax credit – line 51 1,000

Federal income tax withheld from wages (4) 3,700

(1) Calculate their net capital gain/(loss)? (2) What expenses are not deductible for tax purposes? (3) Compare the Jones’s itemized deductions to their standard deduction. The greater of the two is reported on line 40. (4) Federal tax is not allowed as an itemized deduction but is reported on line 61. (5) Calculate tax. Ordinary dividends are taxed as ordinary income and they do not get taxed at the preferential rate. (6) What is their refund or tax due?

Required:

Complete only federal form 1040 for 2011. Round all numbers to the nearest whole dollar. Ignore references to other forms. Also, you must show all supporting calculations (such as net capital gain/(loss), what expenses are not deductible, your choice regarding itemizing or standard deduction, tax calculation and explain if there is a tax due/(refund)) on a separate sheet. Prepare this sheet similar to one you would prepare for your supervisor at work. Submit your tax return and additional information sheet using ‘drop box’.

Check figures: AGI = 64,000