Federal Income Taxes Midterm Exam-Cindy and Don Cowen

  

Federal Income Taxes

Midterm Exam

Show all components of your work for partial credit review.
Cindy (age 40) and Don (age 39) Cowen are married. Don’s 17 year old son
from a former marriage lives with them. They also fully support Cindy’s mother,
Ellen who lives with them. Ella’s only income during 2013 was interest of 5,200.
Cindy works as a retail manager and Don is a self­employed electrician. Their
2013 tax and other information are as follows:
Salary – Cindy
Federal withholding on salary
State withholding on salary
Interest income on bonds:
Issued by Webster Bank
State of Connecticut
Savings account interest
Dividends from RGR, Inc. (all are non­qualified)
Value of employer provided medical insurance
Value of premiums for $50,000 of group term life insurance
Cindy’s mother’s medical expenses paid by Cindy
Inheritance from Cindy’s father’s estate
Personal loan obtained to pay credit card debt
Interest paid on personal loan
Child support received from Don’s ex­wife
Alimony paid to Don’s ex­wife
Donations to church
Real Estate taxes on primary residence
Mortgage interest on primary residence (<$1M)
Don’s business revenues
Don’s business expenses

50,000
18,000
2,000
3,000
2,000
700
5,000
3,000
500
9,500
7,500
20,000
1,000
8,000
3,400
1,500
4,500
3,000
40,000
16,750

Required: Determine the following for the Cowen’s 2013 tax year:
a.

Exclusions (if any)

$ ___________

Federal Income Taxes

Midterm Exam

b.

Gross income (excluding Don’s SE income)

$ ___________

c.

Don’s net self­employment income

$ ___________

d.

Adjusted gross income

$ ___________

e.

Itemized deduction or standard deduction amount

$ ___________

f.

Deduction for exemptions

$ ___________

g.

Taxable income

$ ___________

h.

Income tax liability

$ ___________

i.

Self­employment tax liability

$ ___________

j.

Net tax due/(refund)

$ ___________