Assignment task: Please use current tax rates, exemptions, and laws. Be sure to show ALL of your work so that I can give you partial credit. Use 2023 tax law.
Use these instructions: 2023 Instruction 1040 (irs website).
Jerry and Jess (under 60) have 3 children. They inherited money in January and retired. Here is their income.
Inherited Assets 2,000,000
Chase Interest Income 75,000
Municipal bond interest 40,000
Qualifying dividends 25,000
They have itemized deductions of $15,000. They provide over half of the support of all of their children who live with them and are:
Jeff 18 not a student making $10,000
Barb 20 not a student making $3,000
Stephanie 21 a full-time student making $8,000
- Is Jeff a dependent? Why?
- Is Barb a dependent? Why?
- Is Stephanie a dependent? Why?
- Compute their adjusted gross income.
- Compute their taxable income.
- Compute their tax liability.
- Compute the tax liability for their children.