STATE TAX RETURN PROBLEM W19 SE 2 ACCT318 PAYROLL & STATE TAXES INSTRUCTOR: Theba Parke
Due date: Dec 14, 2018
Ronald (715-XX-0388) and Nancy (716-XX-0388) Studebaker are ma
ied filing jointly. They live at 5684 Beechwood, Grand Rapids, Michigan 49546 which is within the Forest Hills School District. Their phone number is XXXXXXXXXXTheir birthdates are Feb 17, 1941 (Ron) and May 20, 1951 (Nancy). Ron is retired and has a pension that he draws on and receives social security benefits and has Medicare Part B health insurance premiums deducted from his benefits. Only $4874 of his social security benefits were taxable on his federal return. Early in 2017 Nancy was working full-time at K-Mart as a sales clerk and had federal, state and local withholding. Nancy’s employer covers health care premiums for Nancy and her son. Ron paid Alfac Supplemental Health Insurance premiums of $438. Their federal AGI was $40,753.
They have some interest earned from Fifth Third bank and have a little dividend income. They also have a US Savings Bond that is not taxable at the state level.
Nancy has a 20 year-old son, Da
en Ford (717-XX-0388; BIRTHDATE: Sep 18, 1995), from a previous ma
iage who lives with them and attends Davenport University. Nancy received $1200 last year in child support. Da
en does not have the means to support himself and relies on Ron and Nancy. Ron’s hearing has been deteriorating and he is now considered deaf. Ron and Nancy have never had the federal Earned Income Credit (EIC) disallowed. This year they received in federal EIC in the amount of $708.
The Studebakers did not itemize deductions on last year’s federal return. They would like to donate $20 to the Michigan United Way fund on their 2017 return.
The Studebakers were renting an apartment for $650/month for the months of January and Fe
uary in 2017 from the Breton Road Apartments, 4200 Breton Rd, Kentwood, Michigan XXXXXXXXXXTheir address was: 4267 Breton Rd Apt 38, Kentwood, Michigan XXXXXXXXXXThey purchased a home and moved in March 1, 2017 to the Beechwood address. The property taxes for the year were $2,645, the mortgage interest for the year was $6,800 and the taxable value of their home is $82,000. Their DTE gas bill amounted to $2300 for the year.
They have already filed federally but need your help with the state return. They will be returning on October 19, 2018 to sign their return. They would like to electronically deposit any refund received at their local Fifth Third Bank (Routing No XXXXXXXXXXTheir savings account #: 123456.
They forgot to mention but during your interview you find out that they bought laptops totaling $2,100 from Apple online and didn’t pay any sales tax on them. Your state has a Use Tax. The Studebakers do not compute Use Tax on the basis of their AGI, only for large purchases upon which they did not pay any state sales tax. Please complete their tax return prior to their next meeting on Friday, December 14th.