Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice's parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election Campaign Fund.
During 2018, Janice reported the following income and expense items connected with her business.
Income from sale of articles $85,000
Rent 16,500
Utilities 7,900
Supplies 1,800
Insurance 5,000
Travel (including meals of $1,200) 3,500
Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under $ 179, if possible.
Furniture and fixtures (new) costing $21,000 on January 10.
Computer equipment (new) costing $12,400 on July 28.
Janice’s itemized deductions include:
State income tax $2,950
Home mortgage interest paid to First National Bank 6,000
Property taxes on home 2,500
Charitable contribution to her alma mater, State College 1,200
Janice did not keep a record of the sales tax she paid. The amount from the sales tax table is $437.
Janice reports interest income of $4,000 on certificates of deposit at Second National Bank. She made estimated tax payments of $3,000 for 2018.
Required:
a. Compute Janice Morgan’s 2018 Federal income tax payable (or refund due) by providing the following information that would be reported on Form 1040 and Schedules A, B, C, and SE.
When computing the tax liability, do not round your immediate calculations.
If required, round your final answers to the nearest dollar.
Provide the following that would be reported on Janice's Form 1040:
1. Filing status: The taxpayers' filing status:
2. Calculate taxable gross income.
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3. Calculate the total adjustments for AGI.
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4. Calculate adjusted gross income.
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5. Calculate the greater of the standard deduction or itemized deductions.
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6. Calculate the qualified busies income deduction.
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7. Calculate total taxable income.
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8. Calculate the income tax liability.
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9 Calculate SE taxes due.
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