Jack and Jill Jones live in Cambridge, MA. Jack is 42 years old and a chemical engineer for a manufacturing company. Jill is 45 years old and runs a craft business from their home. Jill spends considerable time and effort on her craft business and it has been consistently profitable over the years. The Jones’ have one child Jenny (age 16). Jenny is a high school student and works for a landscaping business during the summer – she earned $5,500 in 2020.

The Jones’ plan to file a joint tax return and provided the following information:

• Jack’s social security number is 101-22-3434
• Jill’s social security number is 201-33-4545
• Jenny’s social security number is 301-44-6060
• Mailing address is 32 School Street, Cambridge, MA 02325

Jack Jones reported the following information relating to his employment during the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
ALT Manufacturing	$124,883	$13,200	$6,400

Jack’s employer withheld all payroll taxes it was required to withhold. The entire Jones family was covered by minimum essential health insurance during each month in 2020. This insurance cost was $12,000 for 2020 and paid for by Jack’s employer. Jack injured himself at work and was out of work for three weeks in March, 2020. Jack received workman’s compensation payments of $5,000 during that period of time.

Jill Jones uses the cash method to account for her business activities which were as follows in 2020:

Craft sales $18,400

Advertising expense $2,230

Supplies expense $4,260

Postage expense $145

Jill made the following estimated tax payments in 2020: $3,000 for Federal income taxes and $1,000 for state income taxes. Jill also received a $20,000 gift in 2020 from her rich uncle who wanted to help her grow her business.

Jack and Jill also received the following investment income during the year:

Interest income from Certificate of Deposit $1,650

Interest income from U.S. Treasury Bond $920

Interest income from Municipal Bond $716

The Jones’ did not own, control or manage any foreign bank accounts, nor were they grantors or beneficiaries of a foreign trust during the tax year.

The Jones’ received a Massachusetts state income tax refund of $500 in May of 2020. The Jones’ received the refund because they had overpaid their MA state individual income tax in 2019. On their 2019 Federal income tax return, the Jones’ itemized their deductions and received full tax benefit (deduction) for the state tax income taxes paid in 2019.

Jack enjoys sports and wages bets on the local sports teams. Jack had gambling winnings of $700 during 2020 and gambling losses of $2,300.

Jenny won an iPad valued at $600 by competing in her high school’s 2020 technology contest. Jenny also received a scholarship for $1,000 towards tuition if she decides to attend the State University and enroll in their technology program upon graduating high school.

The Jones’ received the following CV-19 stimulus checks for the tax year 2020: $2,900 for the first Economic Impact Payment (EIP) and $1,800 for the second EIP.

The Jones’ paid the following expenses during the year:

Mortgage interest on principal residence $13,700

Real property taxes on residence $6,200

Vehicle property tax based upon value $475

State sales tax $750

Unreimbursed medical expenses $2,400

Unreimbursed employee business expenses for Jack $1,500

Interest on credit cards $650

Contribution to American Red Cross $500

Contribution to Veterans of Foreign War $325

Answer rating: 100% (QA)

Answer are highlighted in yellow Solution Particulars Amount Jacks Salary 121883 Jil... View the full answer