- Imagine that you are preparing taxes for a local tax service provider.
A married couple named Judy and Walter Townson have come to you to seeking assistance with their federal income taxes. During your meeting with the Townsons, you gather the following information:
- They are both 55 years of age.
- They have two daughters and one son.
- One daughter (age 25) is married with children.
- One daughter (age 20) is living at home and attending college.
- Their son (age 16) is a junior in high school.
- They are currently paying for their college-student daughter to attend school full time.
- Judy is employed as a teacher and makes $60,000 a year. She used $500 of her personal funds to purchase books and other supplies for her classroom.
- Walter is employed as a CPA and makes $100,000 a year.
- They provided you a 1099-INT which reported $4,500 in interest, of which $500 was savings bond interest.
- They provided you a 1099-DIV which reported $300 in dividends.
- They received a state tax refund last year of $385.
- They provided you a list of expenses including:
- Doctor’s bills, $800.
- Prescriptions, $400.
- New glasses, $2,000.
- Dental bills, $560.
- Braces, $5,000.
- Property taxes for their two cars of $800, which included $50 in decal fees (tabs).
- Real estate taxes of $4,500.
- Mortgage interest of $12,000.
- Gifts to charities, $1,000.
- GoFundMe contribution to a local family in need, $100.
- Tax preparation fees for last year’s taxes, $400.
Consider the most beneficial way for Judy and Walter to file their federal income tax return.
Prepare a brief written summary, no more than 500 words that address the following:
- Estimated taxable income for Judy and Walter (please show computations).
- Summary of tax return, including any suggestions or tax planning considerations.
- Explain how you determined the filing status, dependents, and use of standard/itemized deduction.
- This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment:
- Complete a tax analysis that is informed by tax law and strategies to determine the most beneficial way for a client/family to file their federal income tax return.
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