Question

Clem is married and is a skilled carpenter. Clem's wife, Wanda, works part-time as a substitute grade school teacher. Determine the amount of Clem's expenses that are deductible for AGI this year (if any) under the following independent circumstances: (Leave no answer blank. Enter zero if applicable.)

a. Clem is self-employed and this year he incurred $725 in expenses for tools and supplies related to his job. Since neither were covered by a qualified health plan, Wanda paid health insurance premiums of $6,150 to provide coverage for herself and Clem (not
through an exchange).
b. Clem and Wanda own a garage downtown that they rent to a local business for storage. This year they incurred expenses of $1,490 in utilities and $1,140 in depreciation.
c. Clem paid self-employment tax of $16,600 (the employer portion is $8,300), and Wanda had $7,950 of Social Security taxes withheld from her pay.
d. Clem paid $85 to rent a safe deposit box to store his coin collection. Clem has collected coins intermittently since he was a boy, and he expects to sell his collection when he retires.

Answer 1

Clem can deduct a total of $6,355 in expenses for AGI this year.

Step-by-step explanation:

Under the independent circumstances outlined in the question:

a. Clem can deduct $725 as a self-employed carpenter for tools and supplies related to his job. Wanda's health insurance premiums of $6,150 are not deductible for AGI because they were not paid through an exchange.

b. Clem and Wanda can deduct $1,490 in utilities and $1,140 in depreciation for the garage they own and rent out.

c. Clem can deduct the full amount of self-employment tax he paid of $16,600. Wanda's Social Security taxes withheld from her pay are not deductible for AGI.

d. Clem cannot deduct the $85 he paid to rent a safe deposit box for his coin collection because it is a personal expense.

The total amount of Clem's deductible expenses for AGI this year is $6,355 ($725 + $1,490 + $1,140 + $16,600 - $85).