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Wayne and Maria file a joint tax return on which they itemize their
deductions and report AGI of $50,000. During the year they incurred
$1,500 of medical expenses when Maria broke her leg. Furthermore,
their dentist informed them that their daughter, Alicia, needs $3,000 of
orthodontic work to correct her overbite. Wayne also needs a new pair
of eyeglasses that will cost $300. What tax issues should Wayne and
Maria consider?
7-40
Deduction of Taxes. Joyce is a single, cash-method taxpayer. On April
11, 2014, Joyce paid $120 in state income taxes with her 2013 state
income tax return. During 2014, Joyce had $1,600 in state income
taxes withheld. On April 13, 2015, Joyce paid $200 with her 2014 state
tax return. During 2015, she had $2,100 in state income taxes withheld
from her paycheck. Upon filing her 2015 tax return on April 15, 2016,
she received a refund of $450 for excess state income taxes withheld.
Joyce had total AGI in 2015 and 2016 of $51,000 and $53,500,
respectively. In 2015, Joyce also paid $5,500 in qualified residence
interest.
·
a.What is the amount of state income taxes Joyce may include as
an itemized deduction for 2014?
·
b.What is Joyce’s allowed itemized deduction for state income
taxes for 2015?
· c.What is Joyce’s taxable income for 2015?
· d.What is her AGI for 2016?
7-42
Deduction of Taxes. Dawn, a single, cash-method taxpayer, paid the
following taxes in 2015: Dawn’s employer withheld $5,400 for federal