Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2014, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice’s parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election Campaign Fund.
During 2014, Janice reported the following income and expense items connected with her business.
Income from sale of articles………………………….$85,000
Rent…………………………………………………….16,500
Utilities………………………………………………….7,900
Supplies………………………………………………….1,800
Insurance………………………………………………..5,000
Travel (including meals of $1,200) ……………………3,500
Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under § 179.
• Furniture and fixtures (new) costing $21,000 on January 10.
• Computer equipment (new) costing $12,400 on July 28.
Janice’s itemized deductions include:
State income tax……………………………………………….$3,000
Home mortgage interest paid to First Bank…………………….6,000
Property taxes on home………………………………………….1,500
Charitable contributions…………………………………………1,200
Janice did not keep a record of the sales tax she paid. The pertinent amount from the sales tax table is $437.
Janice reports interest income of $4,000 on certificates of deposit at Second Bank. Janice makes estimated tax payments of $3,000 for 2014.
Compute Janice Morgan’s 2014 Federal income tax payable (or refund due). If you use tax forms for your computations, you will need Forms 1040 and 4562 and Schedules A, B, and C. Suggested software: H&R BLOCK Tax Software.
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