Fluent Essays

I need help showing work for this problem. I only need work for the handwritten tax formula. The answer is $56,080, I just need to know how to get to that answer using 2016 tax tables. The problem is attached. Thanks TaxSlayer Assignment Two amp; Three Requirements: Complete the Tax Formula (8 points) Using TaxSlayer software prepare the tax returns (4 points)... TaxSlayer Assignment Two & Three Requirements: Complete the Tax Formula (8 points) Using TaxSlayer software prepare the tax returns (4 points) Submit both the Tax Formula and complete tax return on Canvas by due date for full credit (12 points) Remember TaxSlayer is still using 2016 tax numbers. Client Information: Mr. and Mrs. Stars have been married 2 years. They have no dependents. Mike Star is an aeronautic engineer and Sheila is attending law school full-time. The following is the information obtained to prepare their 2016 tax return. Client’s Social Security Number 400-00-4723 Filing Status Married Filing Joint Taxpayer’s Date of Birth 03/01/1964 Spouse’s Date of Birth Neither Taxpayer nor Spouse is Blind or Deceased 01/15/1966 Client’s First Name, Initial, and Last Name Mike E. Stars Secondary First Name, Initial, and Last Name Sheila A. Stars Secondary SSN 400-00-4714 Street Address 1492 Ellis Street Zip Code 30906 (Augusta, Georgia) Daytime Telephone 706-868-1298 Taxpayer’s Occupation Aeronautic Engineer Health Insurance Information: Taxpayer and spouse all had minimum essential health care coverage for the entire year. Health coverage was NOT purchased through the marketplace/exchange. No W-2 information to enter. W-2 Information Employer Identification Number 75-9685552 Employer Name/Address Lockheed Martin 2120 Martin Drive Evans, GA 30809 Wages $189,000 Federal Withholding $47,000 Social Security $7,347 Medicare $2,740.50 State GA State ID Number 23-2564155 State Withholding $10,000 Form 1099-G The Stars received a state refund of $13,000 in 2016 for their 2015 state taxes. The Stars took the standard deduction in 2015 for MFJ, $12,400 (Section 1, boxes 1, 2, 3). Dividend Income, Schedule B Information Form 1099-INT The Stars, jointly had interest income from Bank of America in the amount of $500. Tax-exempt interest from Edward Jones of $1,000 Form 1099-DIV Payer Name: Edward Jones Ordinary Dividends (Box 1a): $8,000 Qualified Dividends (Box 1b): $5,000 1099-R Information Mike withdrew from his IRA to help pay for Sheila’s school. 1099-R is for the Taxpayer EIN of Payer: 58-0974325 Payer’s Name and Address: Eagle Financial 456 Ronald Reagan Drive Evans, GA 30809 Gross Distribution: $35,000 Taxable Amount: $35,000 Federal Tax Withheld: $3,500 Distribution Code: 1 Mark the 1099-R as an IRA Distribution Transfer Option to 5329: Part I Line 1 State: GA State ID: No State Tax Withheld 28-3689701 The TOTAL AMOUNT of the 1099-R Distribution is excluded from the 10\% Early Withdrawal Penalty because the funds were used for HIGHER EDUCATION EXPENSES. “Other Taxes” – “Tax on Early Distribution” – Form 5329 Schedule D Capital Gains and Losses 2015 Carryover The Stars’ have a LTCL carryover from 2015 in the amount of $12,500 (Other Capital Gains Data (including Capital Loss Carryover) Schedule D Capital Gains and Losses 2016 – (There is NO ADJUSTMENT CODE information to enter for any transaction): 6000 Shares Google – Box 3 Shows Basis Reported to IRS - Acquired 03/06/2004 – Sold 08/02/2016 – Sale Price $62,600 – Cost $3,200 1500 Shares ACCO – Box 3 Shows Basis Reported to IRS - Acquired 01/12/2016 – Sold 03/01/2016 – Sale Price $25,000 – Cost $40,000 500 Shares BP Oil – Box 3 Shows Basis Reported to IRS - Acquired 02/13/2001 – Sold 04/02/2016 – Sale Price $32,000 – Cost $25,000 2100 Shares RCS – Box 3 Shows Basis Reported to IRS - Acquired 05/19/2003 – Sold 05/20/2016 – Sale Price $32,000 – Cost $56,000 “Other Income” to “Other Compensation Scholarship Sheila received a scholarship for $58,000. $20,000 was applied to tuition and books. Fringe Benefits Mike received the following benefits from his employer not included in his W2 Wages: Medical insurance premiums $12,000 Vision insurance premiums 2,000 Dental insurance premiums 4,000 $50,000 group-term life insurance coverage. Premiums paid by employer 500 $500,000 of whole life insurance coverage. Premiums paid by employer 5,000 Country club membership dues paid by employer 10,000 Tickets to the Braves games paid by employer, only given to top executives 6,000 Professional aeronautic journal subscriptions 500 Net Investment Income Tax – “Other Taxes” Form 8960 The net investment income tax must be taken into consideration. The Stars’ home is paid in full therefore, they will not benefit from itemizing. They choose the standard deduction. Check Figures Tax Formula: Tax Liability $56,080 (based on using 2016 tax rate schedules and preferred rates) Tax Return: Tax Liability $58,018 (based on using 2016 tax rate tables and preferred rates) *** Please note, the software tax calculation is incorrect as they used 28\% on LTCG Hence the reason, I insist you learn the tax formula method. I have notified the publisher. PREPARATION OF 2016 FEDERAL/STATE FORMS & WORKSHEETS: FORM 1040 SCHEDULE B (INTEREST & DIVIDENDS) SCHEDULE D (CAPITAL GAINS & LOSS) FORM 8949 (SALES OF CAPITAL ASSETS) FORM 5329 (TAX ON EARLY RETIREMENT DISTRIBUTION) FORM 8960 (NET INVESTMENT INCOME TAX) ** There may be others, but these are the ones I will grade.