Tim and Sarah Lawrence are married and file a joint return.
Tim and Sarah Lawrence are married and file a joint return. Tim’s Social Security number is 123–45–6789, and Sarah’s Social Security number is 111–11–1111. They reside at 100 Olive Lane, Covington, LA 70434. They have two dependent children, Sean and Debra, ages 12 and 16, respectively. Sean’s Social Security number is 123–45–6788, and Debra’s Social Security number is 123–45–6787. Tim is self-employed as the sole proprietor of an unincorporated business, and Sarah is a corporate executive. Tim reports the following income and expenses from his business.
Gross income | $325,000 |
Business expenses | 201,000 |
Records related to Sarah’s employment provide the following information.
Salary | $145,000 |
Unreimbursed travel expenses (including $200 of meals) | 1,100 |
Unreimbursed entertainment expenses | 500 |
Other pertinent information follows.
Proceeds from sale of stock acquired on July 15 2012 | |
(cost of $12,000), and sold on August 1, 2012 | $ 9,800 |
Proceeds from sale of stock acquired on September 18, 2011 | |
(cost of $5,000), and sold on October 5, 2012 | $ 3,800 |
Wages paid to full-time domestic worker for housekeeping | |
and child supervision | 10,000 |
Interest income received | 7,000 |
Total itemized deductions (not including any potential | |
deductions above) | 27,900 |
Federal income tax withheld | 31,500 |
Estimated payments of Federal income tax | 32,000 |
Compute the 2012 net tax payable or refund due for Tim and Sarah Lawrence.
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Rating:
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Solution: Tim and Sarah Lawrence are married and file a joint return.