Martin S. Albert (Social Security number 111-11-1111) is 39years old and is married to...

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Martin S. Albert (Social Security number 111-11-1111) is 39years old and is married to Michele R. Albert (Social Securitynumber 123-45-6789). The Alberts live at 512 Ferry Road, NewportNews, VA 23601. They file a joint return and have two dependentchildren, Charlene, age 17, and Jordan, age 18. Charlene’s SocialSecurity number is 123-45-6788, and Jordan’s Social Security numberis 123-45-6787. In 2019, Martin and Michele had the followingtransactions:
Martin received $120,000 in salary from Red Steel Corporation,where he is a construction engineer. Withholding for Federal incometax was $10,750. The amounts withheld for FICA taxes were asfollows: $7,049 ($113,700 × 6.2%) for Social Security and $1,740($120,000 × 1.45%) for Medicare. Martin worked in Mexico fromJanuary 1, 2018, until February 15, 2019. His $120,000 salary for2019 includes $18,000 he earned for January and one-half ofFebruary 2019 while working in Mexico.
Martin and Michele received $400 interest on Montgomery County(Virginia) school bonds.
Martin received $2,300 interest from a Bahamian bankaccount.
Michele received 50 shares of Applegate Corporation common stockas a stock dividend. The shares had a fair market value of $2,500at the time Michele received them, and she did not have the optionof receiving cash.
Martin and Michele received a $1,200 refund on their 2018Virginia income taxes. Their itemized deductions in 2018 totaled$34,000.
Martin paid $6,600 alimony to his former wife, Rose T. Morgan(Social Security number 123-45-6786). The divorce was finalized in2016.
Martin and Michele kept the receipts for their sales taxes paidof $1,100.
Martin and Michele’s itemized deductions were as follows:
State income tax paid and withheld totaled $5,100.
Real estate taxes on their principal residence were $3,700.
Mortgage interest on their principal residence was $2,500.
Cash contributions to the church totaled $2,800.
Part 1—Tax Computation
Compute the Alberts’ net tax payable (or refund due) for2019.
Part 2—Tax Planning
The Alberts are considering buying another house. Their housemortgage payments would increase by $500 (to $1,500) per month,which includes a $250 increase in interest and a $100 increase inproperty tax. The Alberts would like to know how much the mortgagepayments would increase net of any change in their income tax. Whatwill be your advice to the Alberts? Write an explanation and showall of your calculations.

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4.2 Ratings (641 Votes)

Martin Albert tax comoutation Amount Salary 120000 Less 2268 Foreign earned Income Exclusion working Note1 Interest on US savings Bonds and Bahamian Account working Note2 2300 State Income Tax refund working Note 3 1200 Stock Dividend working Note 4 Gross Income See Answer

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In: AccountingMartin S. Albert (Social Security number 111-11-1111) is 39years old and is married to Michele...Martin S. Albert (Social Security number 111-11-1111) is 39years old and is married to Michele R. Albert (Social Securitynumber 123-45-6789). The Alberts live at 512 Ferry Road, NewportNews, VA 23601. They file a joint return and have two dependentchildren, Charlene, age 17, and Jordan, age 18. Charlene’s SocialSecurity number is 123-45-6788, and Jordan’s Social Security numberis 123-45-6787. In 2019, Martin and Michele had the followingtransactions:Martin received $120,000 in salary from Red Steel Corporation,where he is a construction engineer. Withholding for Federal incometax was $10,750. The amounts withheld for FICA taxes were asfollows: $7,049 ($113,700 × 6.2%) for Social Security and $1,740($120,000 × 1.45%) for Medicare. Martin worked in Mexico fromJanuary 1, 2018, until February 15, 2019. His $120,000 salary for2019 includes $18,000 he earned for January and one-half ofFebruary 2019 while working in Mexico.Martin and Michele received $400 interest on Montgomery County(Virginia) school bonds.Martin received $2,300 interest from a Bahamian bankaccount.Michele received 50 shares of Applegate Corporation common stockas a stock dividend. The shares had a fair market value of $2,500at the time Michele received them, and she did not have the optionof receiving cash.Martin and Michele received a $1,200 refund on their 2018Virginia income taxes. Their itemized deductions in 2018 totaled$34,000.Martin paid $6,600 alimony to his former wife, Rose T. Morgan(Social Security number 123-45-6786). The divorce was finalized in2016.Martin and Michele kept the receipts for their sales taxes paidof $1,100.Martin and Michele’s itemized deductions were as follows:State income tax paid and withheld totaled $5,100.Real estate taxes on their principal residence were $3,700.Mortgage interest on their principal residence was $2,500.Cash contributions to the church totaled $2,800.Part 1—Tax ComputationCompute the Alberts’ net tax payable (or refund due) for2019.Part 2—Tax PlanningThe Alberts are considering buying another house. Their housemortgage payments would increase by $500 (to $1,500) per month,which includes a $250 increase in interest and a $100 increase inproperty tax. The Alberts would like to know how much the mortgagepayments would increase net of any change in their income tax. Whatwill be your advice to the Alberts? Write an explanation and showall of your calculations.