John Adam is a contract driver who works for XYZ company, since he is not an employee
Question:
John Adam is a contract driver who works for XYZ company, since he is not an employee of XYZ company, he is supposed to get a 1099 form to file his tax rather than W-2s.
For the family condition, he has a wife, Elizabeth, who also work and the two of them file jointly. They have a son who is 8 years old by the end of 2021 and two twin girls who are born in October 2021.
The couple made $55,000 earned income by 2021. On top of that, the couple invested in the stock market. John made a $2,000 gain and Elizabeth had another $2,000 gain in 2021. When John brought his tax document to you in late February, as a new client for his old accountant had retired and moved south for the warm weather, he claims that he would have all tax documents ready soon. But by the beginning of April, somehow John says that XYZ company delayed giving him his 1099 forms and urges you to file according to his payment statements that he downloaded from the company website to avoid paying a fine for late filing.
There are a couple of tax questions raised from this example, please feel free to answer one or more than one of them.
1. Which tax form/schedule you would like to choose to report his 1099 form (if John was able to obtain it) without looking into the tax returns by the other accountant from the past years.
2. Are John and Elizabeth able to claim EIC and if so, how much?
3. Can John and Elizabeth claim advanced child credit on the newborns? If they are eligible to do so, are they able to claim the allowable amount for the whole year or partial year since the kids were born? In conclusion, how much-advanced child credit John and Elizabeth can claim?
4. Do you think it is reasonable to file John and Elizabeth’s tax according to John’s self-supported web-downloaded payment records?
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill