View the step-by-step solution to:

Question

Terry and Ashley have come to you for help filing their 2018 tax return. They are married on December 31, 2018 and

are both age 40. They live with their three qualifying children, Nick, Betty, and Roger, who are 12, 14, and 17 years old, respectively.

They have made the following requests:

• They wish to file a joint tax return.

• If they overpaid their taxes this year, they would like to receive half as a refund and have half applied to next year's federal tax return.


Terry and Ashley have the following income items during 2018:

• Terry's wages of $50,000

• Terry's unemployment compensation of $5,000

• Ashley's wages of $60,000

• Interest from a city of Chicago bond of $2,000

• Interest from a corporate bond of $3,000

• Ordinary dividends of $2,000

• Gift from Leonard's father of a new computer that cost $3,000

• A $3,000 refund from the State of Illinois for income taxes paid in 2017


Terry and Ashley incurred the following expenses/losses during 2018:

• Contributions of $5,500 to each of Terry and Ashley's traditional IRAs, i.e., $11,000 total (they are not covered by any other qualified retirement plans)

• Qualified medical expenses of $9,000

• Personal credit card interest expense of $8,000

• Charitable contributions of $4,000

• Ten $25 parking tickets totaling $250

• Mortgage interest on primary residence of $8,000 (mortgage is $200,000)

• Property taxes on the primary residence of $6,500

• Illinois state and local income taxes paid of $5,500

• Federal tax withholding on Terry and Ashley's W-2s of $10,000


They also provide you with the following information about their prior year return:

• On their prior year federal tax return, they claimed itemized deductions.

• Terry and Ashley elected to have $139 of their 2017 tax refund applied to 2018.


Deductions from AGI

 

Q1. What amount is reported on Schedule A Line 1 - medical expenses? Note: Enter whole numbers only. Do not enter a $ sign or a comma.

Q2. What amount is reported on Schedule A Line 2 - AGI? Note: Enter whole numbers only. Do not enter a $ sign or a comma.

Q3. What amount is reported on Schedule A Line 3 - medical deduction floor? Note: Enter whole numbers only. Do not enter a $ sign or a comma.

Q4. What amount is reported on Schedule A Line 4 - allowable medical deduction? Note: Enter whole numbers only. Do not enter a $ sign or a comma.

Q5. What amount is reported on Schedule A Line 5a - income taxes? Note: Enter whole numbers only. Do not enter a $ sign or a comma.

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes