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Required: Use the information below to complete the taxpayers taxable income and tax. Make assumptions regarding any information not given.

Client Information:

Taxpayer Name: John Doe Spouse: Jane Doe

Taxpayer DOB: March 2, 1963 DOB: June 20, 1965

Occupation: Lawyer Occupation: Interior Designer

Dependents:

Michael Doe Emily Doe Bella Doe

April 18, 2000 May 21, 2002 June 24, 2018

Child Care Expenses

John and Jane paid Challenges Day Care a total of $3,500 to care for Bella Doe while they worked. Challenges gave them a receipt for the full amount and the receipt included their federal ID #.

Education Expenses

Michael started his first year at State University. Total expenses:

$11,500 Tuition

381 Fees

427 Books

4,400 Room and Board

Michael received a scholarship for $5,000, which was limited to pay his tuition. John and Jane paid the remainder of the tuition which was 6,500.

Earned Income

Jane works for Macro Interior Design and her W-2 is as follows:

Wages $67,877

Federal withholding $7,354

Social Security withholding $4,208

Medicare withholding $543

State (CA) withholding $4,947

Self-Employment Income

John received $147,647 from his clients. His expenses were as follows:

Advertising $1,750	Utilities $1,834	Court Fees $10,542
Accounting Fees 1,500	Office Supplies 1,200	Office Rent 4,400
Secretary Wages 32,000	Liability Insurance 650
Travel 3,196	Equipment Repairs 2,539	Computer Repairs 1,425
Licenses and fees 660	Client Gifts 2,500 for 100 people

Rental Income

John and Jane purchased a rental property in January of 2016 to offset some of their income. The home was purchased for $200,000 and $25,000 was for the land. It was empty for part of the year, but a new tenant moved in February 1^st of the current year. The rent is $2,250 per month. The renter paid a refundable $875 cleaning fee.

The following expenses were paid by the Does:

Advertising $ 75

Insurance 532

Utilities 150 (while house was empty)

Repairs 450

Property Taxes 2,769

Mortgage Interest 4,525

Other Deductions/Expenses/Payments

John and Jane give you the following information:

Federal quarterly taxes paid for 2018 $14,000

2017 State Balance Due $1,349 Paid April 10^th, 2018

2018 State Quarterly payments for $4,800 Paid each quarter on time (1,200 per payment)

(4^th Qtr 2017 payment was $1,000 paid in Jan 2018)

Property taxes 3,478

Mortgage Interest 10,432

Cash Donations to Church 15,000

Cash Donations to Goodwill 399

Car Loan Interest 500

BofA Credit Card Interest 1,200

John and Jane will file MFJ for 2018 and will utilize any available deductions/credits.

Compute the following:

Total includable gross income:

Deductions for AGI:

AGI:

Itemized Deductions:

Which should they choose (itemized or standard):

Taxable income:

Tax:

Credits:

Tax Due/Refund:

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