George and Georgia Williams are spouses above 65 years, then entitled to pay tax since their gross income exceeds $27,000. The spouses are married and living together then will include their Social Security Benefits of $21,000 per year to their gross income. The spouses, however, above 65 years, will have to file a tax return even if they have a dependent Elsa Williams because their gross income is above $14,800 (Phillips 2014).
The spouses paid tax jointly of $ 6,050 from the income received from rental income as per the case study. But the income from the rent was supposed to be $1,011.20 after subtracting the house expenses which include: purchase of a new dishwasher, microwave, landscaping, security, depreciation, and mortgage interest. The remaining amount will be calculated on the 10% tax rate from the federal tax span in the year 2019/2020.
The other incomes which required were to be paid for tax is Defined Benefit Plan tax of $2,678, Social security income tax of $2,604 (12.4%), taxable interest income of $19.7 tax, and the short-term stock investment gain tax of $6.1 (10%). This gives a total tax of $6,319 making a difference of $262.9 unpaid tax plus a penalty of 5% totals to $276.045 tax to be submitted to the US Federal tax by the spouse (Beer, Klemm and Matheson 2018).
Attached is a filled form 1040 for the spouses as shown below:
References
Beer, Sebastian, Alexander Klemm, and Thornton Matheson. 2018. “Tax Spillovers From US Corporate Income Tax Reform”. IMF Working Papers 18 (166): 1. doi:10.5089/9781484367544.001.
Phillips, Mark D. 2014. “Individual Income Tax Compliance And Information Reporting: What Do The U.S. Data Show?”. National Tax Journal 67 (3): 531-568. doi:10.17310/ntj.2014.3.02.
