Federal Income Taxes Midterm Exam Mod 4 (2016)

Show all components of your work for partial credit review.

Rob (age 50) and Susan (age 49) Cowen are married. Susan works as a retail manager and Rob is a self-employed electrician but does not maintain a home office. Their 2015 tax and other information are as follows:

Salary – Susan	65,000
Federal withholding on salary	20,000
State withholding on salary	3,000
Interest income on municipal bonds:
State of Connecticut	2,000
Savings account interest	900
Dividends from RGR, Inc. (all are non-qualified)	5,000
Value of employer provided medical insurance	2,000
Inheritance from Susan’s father’s estate	7,000
Interest paid on personal car loan	800
Interest paid on personal loan	1,500
Child support paid to Rob’s ex-wife	12,000
Alimony paid to Rob’s ex-wife	5,000
Qualified Out of Pocket Medical Expenses	3,000
Donations to church Real Estate taxes on primary residence	1,500 7,000
Mortgage interest on primary residence (<$1M)	5,000
Rob’s business revenues	55,000
Rob’s business expenses	15,000

Required: Using the tax formula format, determine the following for the Cowen’s2015 tax year (show all calculations):

1. All Income $___________

1. Exclusions (if any) $ ___________

1. Gross income (including Rob’s SE income) $ ___________

1. Deductions For AGI $___________

1. Adjusted gross income $ ___________

1. Itemized deduction or standard deduction amount $ ___________

1. Deduction for exemptions $ ___________

1. Taxable income $ ___________

1. Income tax liability $ ___________

1. Self-employment tax liability $ ___________

1. Net tax due or refund (show calculation) $ ___________