Jeremy and Alyssa Johnson have been married for five years and do not have any children. Jeremy was married previously and has one child from the prior marriage. He is self-employed and operates his own computer repair store. For the first two months of the year, Alyssa worked for Office Depot as an employee. In March, Alyssa accepted a new job with Super Toys Inc. (ST), where she worked for the remainder of the year. This year, the Johnsons received $262,000 of gross income.a. Expenses associated with Jeremyâs store include $42,250 insalary (and employment taxes) to employees, $47,700 of supplies,and $18,900 in rent and other administrative expenses.

b. As a salesperson, Alyssa incurred $2,090 in travel expensesrelated to her employment that were not reimbursed by heremployer.

c. The Johnsons own a piece of raw land held as an investment.They paid $590 of real property taxes on the property and theyincurred $245 of expenses in travel costs to see the property andto evaluate other similar potential investment properties.

d. The Johnsons own a rental home. They incurred $8,590 ofexpenses associated with the property.

e. Jeremy paid $4,590 for health insurance coverage for himself(not through an exchange). Alyssa was covered by health plansprovided by her employer, but Jeremy is not eligible for the planuntil next year.

f. Jeremy paid $2,590 in self-employment taxes ($1,295represents the employer portion of the self-employment taxes).

g. Jeremy paid $5,180 in alimony and $3,135 in child supportfrom his prior marriage (divorced in 2010).

h. The Johnsons donated $2,090 to their favorite charity.

Determine the Johnson's AGI given the above information:

Johnson's AGI=?

Respuesta :

Solution:

Gross income : 262000  

a) Ordinary and necessary business expenses

amount                                      explanation

108850                          Ordinary expenses associated with Jeremyâs                              

                                         business (42250+47700+18900)

b) Unreimbursed  employment expenses

amount                                      explanation

  -                        Un reimbursed employee business expenses

                                  are deductible from AGI not for AGI

c) Real property taxes and investment  expenses.

amount                                      explanation

   -                                 Taxes and investment expenses

                                      are deductible from AGI not for AGI

d) Rental expenses

amount                                      explanation

8590                       Rental expenses are deductible for

                        AGI even though they aretechnically investment or

                                  production of income expenses.

e) Self-employed  health insurance

amount                                      explanation

4590                       Jeremy may deduct all the costs of his

                                   health insurance because he is not eligible

                                          for health plan

f) Self- employment  taxes

amount                                      explanation

1295                         ½ of self-employment taxes allowed

                                                 as for AGI deduction

g) Alimony

amount                                      explanation

  5180                                Alimony is allowed for AGI deductions

h) Donations

amount                                      explanation

  -                                 Charitable contributions are from

                                              not for AGI deductions

Total for AGI  deductions Amount

                                                128505  

AGI                                          135495