John and Kathy are married with two children. John has two


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John and Kathy are married with two children. John has two children from a previous marriage. He paid alimony of $25,000 and child support of $15,000 to his ex-spouse. John has a written agreement as the non-custodial parent to claim the two children that live with his ex-spouse as his dependents. John has wages of $140,000 ($21,000 in withholding) and Kathy has wages of $25,000 ($1,250 in withholding). John received $900 in interest from is savings account. He also received dividends of $800 from his stock invested in Exxon. Kathy received $2,000 in unemployment ($200 in withholding). John has rental property (an apartment) that he receives $15,000. He paid the following expenses for the rental property: $200-advertising, $400 in cleaning, $1,000 for insurance, $250 in legal fees related to preparing the rental agreement, $2,000 for the mortgage interest, $900 supplies, $100 in repairs, and $1,200 in real estate taxes. His original basis in the property was $100,000 (should calculated depreciation of $3,636 using straight-line depreciation). He did not materially participate in the business. Kathy has a small bookkeeping business. Her father gave her a gift of $10,000 in order to start her business. Her gross sales are $45,000. She paid the following expenses for her business: $200 in advertising, $8,000 for contract labor, $800 for insurance, $1,000 in legal fees for setting her business up, $4,000 for rent, $1,000 for office supplies, $500 for licenses, $2,000 for utilities, and $500 for miscellaneous office expenses. Additional expenses included the following: 1. Medical expenses of $20,000—no insurance reimbursement 2. Real estate taxes on home of $4,000 3. Mortgage interest on home of $6,000 4. Cash contributions to United Way-$500; St. Jude-$100; KERA-$100; UNT-$250 5. Contributed clothing articles to Goodwill-estimated FMV $400 (drove 15 miles to make contributions). 6. Tax preparation fees of $400 7. Attorney fees of $4,000 for IRS audit 8. Tax advice of $150 9. Bank fees of $50 for investment activities account 10. Safe deposit box of $50 for investment activities account 11. Employee business expenses: a) Business mileage 1200 miles, total mileage for year 12,000; daily commute round trip 45 miles (5 days/week; 50 weeks); car placed in service 8/1/12 (use standard mileage of .565) b) Meals-use standard rate of $46/day for 18 days c) Parking fees and tolls-$250 d) Overnight ravel expense-$4,000 e) Other job related expenses-$500 f) Reimbursed 3,200 for everything but meals (reimbursed $428 for meals) Use the attached 1040 forms and supporting schedules to calculate the taxable income. Standard deduction for married individuals, filing joint returns is $12,200. 3 pages f1040.pdf Certain Cash Contributions for Typhoon Haiyan Relief Efforts in the Philippines Can Be Deducted on Your 2013 Tax Return A new law allows you to choose to deduct certain charitable contributions of money on your 2013 tax return instead of your 2014 return. The contributions must have been made after March 25, 2014, and before April 15, 2014, for the relief of victims in the Republic of the Philippines affected by the November 8, 2013, typhoon. Contributions of money include contributions made by cash, check, money order, credit card, charge card, debit card, or via cell phone. The new law was enacted after the 2013 forms, instructions, and publications had already been printed. When preparing your 2013 tax return, you may complete the forms as if these contributions were made on December 31, 2013, instead of in 2014. To deduct your charitable contributions, you must itemize deductions on Schedule A (Form 1040) or Schedule A (Form 1040NR). The contribution must be made to a qualified organization and meet all other requirements for charitable contribution deductions. However, if you made the contribution by phone or text message, a telephone bill showing the name of the donee organization, the date of the c

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