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3. Sophia and her two kids moved into the home of her new husband, Richard...

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Finance

3. Sophia and her two kids moved into the home of her new husband, Richard Castle, in Nashville, TN. The family income consists of the following: $60,000 from Sophias book royalties, $90,000 from Richards salary, $10,000 in life insurance proceeds from a deceased aunt, $140 in interest from savings, $15,000 in child support from her ex-husband, $500 cash as a Christmas gift from Richards parents; and a $1,600 tuition-and-books scholarship Sophia received to go to college part-term last year.

a) What is the total of their reportable gross income?

b) Which items are not taxable income?

c) After Richard put $5,600 into a tax-deferred retirement plan accounts last year, what is their adjusted gross income?

d) How much is the allowable standard deduction for the household?

e) What is their taxable income on a joint return?

f) What is their final federal income tax liability and what is their marginal tax rate?

g) If Richards employer withheld $25,000 for income taxes, does the couple owe money to the government or do they get a refund? How much?

h) Give two suggestions to Sophia family to reduce next years tax liability.

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