Question

The following information applies to Caroline, who is single, for 2017:

Answer 1

Answer:

1. Child support received  ⇒ NOT TAXABLE

2. Life insurance proceeds received as a result of the death of her mother  ⇒ NOT TAXABLE, ONLY INTERESTS RECEIVED FROM A LIFE INSURANCE POLICY ARE TAXABLE, THE PRINCIPAL IS NOT TAXABLE.

3. Alimony received  ⇒ TAXABLE IN 2017. THE TC&JA ESTABLISHED THAT ALL ALIMONY RECEIVED STARTING 2019 WOULD BE TREATED AS CHILD SUPPORT, BUT ANY ALIMONY PAYMENTS ESTABLISHED AND ALREADY PAID UNTIL 2018 ARE CONSIDERED INCOME FOR THE RECEIVING PARTY AND ARE TAX DEDUCTIBLE FOR THE GIVING PARTY.

4. Salary  ⇒ TAXABLE INCOME

5. Jury duty fees   ⇒ TAXABLE INCOME

Identify which items Caroline can deduct (fully or partially).

6. Penalty for early withdrawal from savings  ⇒ YOU CANNOT DEDUCT ANY PENALTIES FROM EARLY WITHDRAWALS FROM IRA ACCOUNTS, YOU CAN DEDUCT PENALTIES FROM CASHING A CASH DEPOSIT EARLY, BUT I DON'T THINK THIS IS THE CASE.

7. Contributions to Health Savings Account  ⇒ 100% TAX DEDUCTIBLE

8. Caroline's taxable income in 2017 is $.

Salary $44,000

Alimony received $9,600

Jury duty fees $75

Contributions to Health Savings Account ($3,600)

Standard deduction for single filer 2017 ($6,350)

Personal exemption ($4,050)

Her mother cannot be claimed as a dependent because her income was higher than the gross income limit. Since we are not given the number of children, or if they continued to be minors during more than half of 2017, we cannot include them in our calculations. That is also why I considered Caroline a single filer and not a head of household.

total taxable income = $39,675