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:
a. Dividends from Security Corporation stock, $3000.
b. Interest Income:
i. Best Money Market Fund
$850
ii. First Orlando Bank CD
$2,450.00
iii. 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.
4. 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)
5. Routine uninsured medical expenses:
a. Doctors/Hospitals
b. Prescription Drugs
c. Over-the Counter medications
d. Medicare, part B
e. Glasses
$2500
$600
$550
$500
$300
6. 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
j. Student loan interest
Prepare and Print the Elder’s income tax returns
$ 250.00
$500.00
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:
a. Dividends from Security Corporation stock, $300.
b. 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.
c. Interest Income:
Best Money Market Fund
$850
3. Routine uninsured medical expenses:
a. Doctors
b. Prescription Drugs
c. Over-the Counter medications
Prepare and Print the John’s income tax returns
$500
$600
$150