Janet and Pat McGuire Are Married and File a 1040

question 20

Multiple Choice

Janet and Pat McGuire are married and file a 1040 jointly. Janet earns $28,000 and Pat earns $18,500 for the year. They have two children. They have earned interest income of $240. Janet contributed $2,000 to her IRA and Pat contributed $1,500 to his. Their itemized deductions are $3,750 in medical and dental expenses, $4,500 in real estate taxes, $7,480 in home mortgage interest, $1,000 in student loan interest, $1,100 in personal property taxes, and $675 in charitable contributions. Together, they had $3,200 withheld for taxes. Use a tax table. Which is true about how much Janet and Pat either owe in taxes or have due as a refund?

• A) owe $1,802
• B) refund of $1,802
• C) owe $1,521
• D) refund of $1,521

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Definitions:

Ordinary Annuity

A series of equal payments made at regular intervals, with the typical assumption that each payment occurs at the end of a period.

Deferred Annuity

An insurance product that provides future payments to the holder, typically starting at retirement, after an initial investment period.

Ordinary Annuity

A succession of equivalent remittances occurring at regular intervals for a certain stretch of time.

Deferred Annuity

An insurance product that provides future payments to the holder, usually after retirement, where payments are delayed for a certain period.