Tax Problems

1. John and Jane Elder live at 1040 Lakeview Drive, Orlando Florida 32801. Their telephone number is 904-444-5555. John works at the Gator Golf Club.. Jane works at the local music store, Thomas Piano Company, as a piano tuner. John’s and Jane’s Social Security numbers are 154-32-1234 and 265-43-2123, respectively. The information presented relates to their activities during the current tax year.

  1. From John’s gross salary was $28,000 salary, 403-B plan contributions were $3,000,withholding for federal income tax was $3,750; for Social Security, $1625; and Medicare tax, $406.
  2. Jane’s earnings totaled $18,000; withholding for federal income tax was $2,700; for social security $1,170, and for Medicare tax, $261.
  3. Other items of income received during the year included:
  4. Dividends from Security Corporation stock, $3000.
  5. Interest Income:
  6. Best Money Market Fund$850
  7. First Orlando Bank CD$2,450.00
  8. City of Miami GO bond $600.00

c. Sale of shares in a mutual fund for $2000 with an original cost of $1200. The shares were held for 2 years.

  1. As a result of a hurricane during September, The Elder’s Volvo station wagon was totally destroyed. Its value at the time of destruction was $15,000, while its original cost was $22,000 when purchased on October 1, 1996. Unfortunately, the auto was not insured; John forgot to pay the bill. (See Casualties and Thefts publication (4684) and schedule A)
  1. Routine uninsured medical expenses:

a. Doctors/Hospitals$2500

b. Prescription Drugs$600

c. Over-the Counter medications$550

d. Medicare, part B$500

e. Glasses$300

  1. Other expenditures made during the year include:

a. Real Estate Taxes$1800

b. Cash charitable contributions 4,500

c. Charitable Contributions other than cash

Donation of clothes with an original cost of $700

Donation of a 6-year Ford explorer with an original cost of $22,000

d. Mortgage interest$7500.00

e. Car loan interest$ 1300.00

f. Home equity loan interest$ 750.00

g. Union dues$1000.00

h. Tax Preparation $ 300.00

i. Jane’s IRA contribution$ 250.00

j. Student loan interest$500.00

Prepare and Print the Elder’s income tax returns

2. John Elder lives at 1040 Lakeview Drive, Orlando Florida 32801. His telephone number is 904-444-5555. John, who is 20, enjoys attending school and works part-time at CSX. John’s Social Security numbers is 154-32-1234. The information presented relates to their activities during the current tax year.

John’s parents still claim him as an exemption on their taxes.

1. From John’s $12,000 salary, withholding for federal income tax was $ 2,160; for Social Security, $750, and Medicare tax, $174.00.

2. Other items of income received during the year included:

  1. Dividends from Security Corporation stock, $300.
  2. John sold a part of his mutual fund for $1000 and his average cost basis was $780.00 He has owned the mutual fund for several years.
  3. Interest Income:

Best Money Market Fund$850

  1. Routine uninsured medical expenses:

a. Doctors$500

b. Prescription Drugs$600

c. Over-the Counter medications$150

Prepare and Print the John’s income tax returns