Daniel B. Butler and Freida C. Butler, husband and wife, file a joint return. The Butlers live at 625 Oak Street Corbin, KY 40701. Dan’s social security number is 111-11-1111, and Freida’s is 123-45-6789. Dan was born on 1/15/63 and Freida was born on 8/20/1964.
During 2014, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home:
a. Gina, their daughter, age 22, a full-time student, who married on December 21, 2014, has no income of her own and for 2014 did not file a joint return with her husband, Casey, who earned $10,600 during 2014. Gina’s social security number is 123-45-6788.
b. Sam, their son, age 20, who had gross income of $6,300 in 2014, dropped out of college in October 2014. He had graduated from high school in May 2014. Sam’s social security number is 123-45-6787.
c. Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben’s social security number is 12304506786.
Dan was employed as a manager at WJJJ, Inc. (employer ID number is 11-111), 604 Franklin Street, Corbin KY 40702), and Freida was employed as a sales-person for Corbin Realty, Inc. (employer ID number is 98-7654321, 899 Central Street, Corbin, KY 40701). Selected Information from the W-2 forms provided by the employers is presented below. Dan and Freida use the cash method.
Line Description Dan Freida
1 Wages, tips, other compensation $74,000 $86,000
2 Federal Income tax withheld $11,000 $12,400
17 State income tax withheld $2,960 $3,440
Freida sold a house on 12/30/2014 and will be paid a commission of $3,100 (not included in the $86,000 reported on the W-2) on the January 10, 2015 closing date.
Other income (as reported on 1099 Forms) for 2014 consisted of the following:
Dividends on CSX stock (qualified) $4,200
Interest on savings at Second Bank 1,600
Interest on City of Corbin bonds 900
Interest on First Bank CD 382
The $382 from First Bank was original issue discount. Dan and Freida collected $16,000 on the First Bank CD that matured on September 30, 2014. The CD was purchased on October 1, 2012, for $14,995, and the yield to maturity was 3.3%
Dan received a schedule K-1 from the Falcon partnership, which showed his distributive share of income as $7,000. In addition to the above, Dan and Freida’s itemized deductions included the following:
Paid on 2014 Kentucky income tax $700
Personal property tax paid 600
Real estate taxes paid 1,800
Interest on home mortgage (Corbin S&L) 4,900
Cash contributions to the Boy Scouts 800
Sales tax from the sales tax table is $1,860. Dan and Freida made Federal estimated tax payments of $8,000. The Kentucky income tax rate is 4%.
Compute Dan and Freida’s 2014 Federal income tax payable (or refund due).
Using tax forms for your computations you will need 1040 and schedules A,B, and E.Attach separate document showing any work done in order to complete forms