Jack and Jill Hill had the following items of income in 2021. Jack is 63 and Jill is 65.

They purchased a 15-year annuity for $46,000 (Interest is taxable). Starting in March, they will receive $375 per month.

Interest on savings account                                                     $850

Interest on municipal bonds                                                    $625

Jill: Social Security payments                                                  $6,000

Wages from ABC Corp.                                                         $12,000

Taxable pension                                                                      $10,000

Jack: Wages from ABC Corp.                                    $30,000

Sick pay due to illness paid by insurance company

(premiums paid by ABC )                                                       $2,000

Cash allowance to pay for meals during work hours              $400

Payments by ABC to his qualified pension plan                     $1,000

Group-term life insurance paid by ABC on insurance

coverage 0f $60,000                                                                $225

On January 1, 2021, Jack invested in two series HH bonds. Bond No. 1 was issued in the name of Peter and his son as co-owners. Bond No. 2 was issued in the name of Jack's son, although Jack was named as the sole beneficiary. In 2021, Bonds No. 1 and No. 2 paid interest of $2,000 and $1,000, respectively. (What is the amount of interest income to be reported by Jack and by his son for 20X1?) The son is not a dependent.

1.     Compute their taxable income.

2.     Compute their tax liability.

3. Jack and Jill Hill calculations

Answer rating: 100% (QA)

1 Taxable Amount Annuity 375 Jack Taxable Income 37585062512000100... View the full answer