Mario, 35, is single and lives with his girlfriend, Huyen, also 35. Mario has a 6-year-old son,
Manpreet, who lived with him for all of 2018. Mario provided more than 50% of the support for
both Manpreet and Huyen in 2018.
In 2018, Mario earned a salary of $76,000. In addition to his salary, Mario also received alimony
of $1,000 per month and child support payments of $500 per month from his ex-spouse. Mario
contributed $2,500 to an individual retirement account in 2018. Mario paid $13,000 of
expenditures that qualify as itemized deductions and childcare costs of $6,000 to allow Mario to
work. Mario had a total of $6,500 in federal income taxes withheld from his paychecks during
Huyen worked on and off in 2018 and earned wages of $4,000. Huyen paid no expenses that
qualify as deductions. Huyen had a total of $400 in federal income taxes withheld from her
paychecks during 2018.
A. What is Mario’s federal gross income for 2018?
B. What is Mario’s federal adjusted gross income for 2018?
C. What is the total amount of Mario’s deductions from AGI for 2018?
D. What is Mario’s federal taxable income for 2018?
E. What is Mario’s federal taxes payable or refund due for 2018?
F. Mario is upset because he received a large federal income tax refund last year (tax year
2017). Mario thinks that the tax reform enacted at the end of 2017 resulted in higher
taxes for him this year. Briefly explain to Mario why that is not necessarily the case just
because he did not receive a large refund again this year.