Description
Suppose you are an Enrolled Agent with a client that come to you for help with figuring out their taxable income. Based on the data below, you must determine the federal taxable income for the client for tax year 2020.
Ben and Jamie Newton are a married couple that support Ben’s parents who are in a nursing home. The parents are 70 years old and their only income is $10,700 social security, $2,000 interest income, and $1,200 dividend income.
Ben’s annual salary is $56,000, and Jamie’s annual salary is $41,000. They have two children that live at home.
Jamie receives stock dividends of $400 from stock she owned prior to marriage. In addition, she received $250 in dividends from a life insurance policy that she owned prior to marriage as well.
The couple received $650 in interest income from their savings account and $100 interest from state government bonds.
Ben is a bookkeeper and negotiates with his dentist to do dental worth valued at $2,000 in exchange for $1,000 worth of bookkeeping services.
They had $28,000 in itemized deductions.
DIRECTIONS:COMPILE YOUR ANSWER ON AN EXCEL SPREADSHEET – THE SPREADSHEET MUST SHOW INCOME ABOVE THE LINE AND BELOW THE LINE DEDUCTIONS TO ARRIVE AT TAXABLE INCOME.
