Compute net tax payable or refund due for Alice and Bruce Byrd for 2018

    Question: Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security
    numbers are 123-45-6789 and 111-11-1112, respectively. Alice’s birthday is Sep-
    tember 21, 1971, and Bruce’s is June 27, 1970. They live at 473 Revere Avenue, Lowell,
    MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Low-
    ell, MA 01850 (employer identification number 98-7654321). Bruce is the manager of
    a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247
    Central Avenue, Hauppauge, NY 11788 (employer identification number 11-1111111).
    The following information is shown on their Wage and Tax Statements (Form W–2)
    for 2018.
    Description Alice Bruce
    1 Wages, tips, other compensation $58,000 $62,100
    2 Federal income tax withheld 4,500 5,300
    3 Social Security wages 58,000 62,100
    4 Social Security tax withheld 3,596 3,850
    5 Medicare wages and tips 58,000 62,100
    6 Medicare tax withheld 841 900
    15 State Massachusetts Massachusetts
    16 State wages, tips, etc. 58,000 62,100
    17 State income tax withheld 2,950 3,100
    The Byrds provide over half of the support of their two children, Cynthia (born January
    25, 1994, Social Security number 123-45-6788) and John (born February 7, 1998, Social
    Security number 123-45-6786). Both children are full-time students and live with the
    Byrds except when they are away at college. Cynthia earned $6,200 from a summer
    internship in 2018, and John earned $3,800 from a part-time job.
    During 2018, the Byrds furnished 60% of the total support of Bruce’s widower father,
    Sam Byrd (born March 6, 1942, Social Security number 123-45-6787). Sam lived alone
    and covered the rest of his support with his Social Security benefits. Sam died in Novem-
    ber, and Bruce, the beneficiary of a policy on Sam’s life, received life insurance proceeds
    of $1,600,000 on December 28.
    The Byrds had the following expenses relating to their personal residence during
    Property taxes $5,000
    Qualified interest on home mortgage 8,700
    Repairs to roof 5,750
    Utilities 4,100
    Fire and theft insurance 1,900
    The following facts relate to medical expenses for 2018:
    Medical insurance premiums $4,500
    Doctor bill for Sam incurred in 2012 and not paid until 2013 7,600
    Operation for Sam 8,500
    Prescription medicines for Sam 900
    Hospital expenses for Sam 3,500
    Reimbursement from insurance company, received in 2013 3,600
    The medical expenses for Sam represent most of the 60% that Bruce contributed to-
    ward his father’s support.
    Other relevant information follows:
    • When they filed their 2017 state return in 2018, the Byrds paid additional state
    income tax of $900.
    • During 2018, Alice and Bruce attended a dinner dance sponsored by the Lowell
    Police Disability Association (a qualified charitable organization). The Byrds paid
    $300 for the tickets. The cost of comparable entertainment would normally be $50.
    • The Byrds contributed $5,000 to Lowell Presbyterian Church and gave used clothing
    (cost of $1,200 and fair market value of $350) to the Salvation Army. All donations
    are supported by receipts, and the clothing is in very good condition.
    • Via a crowdfunding site (, Alice and Bruce made a gift to a needy family who lost their home in a fire ($400). In addition they made several cash gifts to homeless individuals downtown (estimated to be $65).
    • In 2018, the Byrds received interest income of $2750 which was reported on a Form 1099-INT from Second National Bank, 125 Oak Street, Lowell, MA 01850 (Employer identification number 98-7654322).
    • Alice’s employer requires that all employees wear uniforms to work. During 2018,
    Alice spent $850 on new uniforms and $566 on laundry charges.
    • Bruce paid $400 for an annual subscription to the Journal of Franchise Management and $741 for annual membership dues to his professional association.
    • Neither Alice’s nor Bruce’s employer reimburses for employee expenses.
    • The Byrds do not keep the receipts for the sales taxes they paid and had no major
    purchases subject to sales tax.
    • Alice and Bruce paid no estimated Federal income tax. Neither Alice nor Bruce
    wants to designate $3 to the Presidential Election Campaign Fund.
    • This year the Byrds gave each of their children $2000, which was then deposited into their Roth IRAs.
    • All members of the Byrd family had health insurance coverage for all of 2018.
    • The home mortgage interest was reported on Form 1098 by Lowell Commercial Bank, P.O. Box 1000, Lowell, MA 01850 (Employer Identification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2018) was taken out by the Byrds on May 1, 2014.
    Part 1—Tax Computation ( Do not use tax software !)
    Compute net tax payable or refund due for Alice and Bruce Byrd for 2018. If they have
    overpaid, they want the amount to be refunded to them.

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