Advanced Scenario 8: Stephanie Winter

Interview Notes

Stephanie is a paralegal, age 26, and single.

Stephanie has investment income and a consolidated broker's statement.

Stephanie is self-employed delivering meals for Fast Eats on the weekends. She received a Form 1099-NEC and a Form 1099-K. She received additional cash payments of $570 including tips.

Stephanie uses the cash method of accounting. She uses business code 492000.

Stephanie provided a statement from Fast Eats indicating the fees paid for the year. These fees are considered ordinary and necessary for the food delivery business:

o $150 for insulated box rental

o $50 for vehicle safety inspection (required by Fast Eats)

o $600 for Fast Eats fees

Stephanie also kept receipts for the following out-of-pocket expenses:

o $80 for tolls while making deliveries

o $300 for speeding ticket

o $160 for Stephanie's lunches

Stephanie's record keeping application shows she has driven a total of 3,000 miles during and between deliveries:

o She placed her only vehicle, an SUV, in service on 3/15/2020. The total mileage on her SUV for tax year 2024 was 12,500 miles. Of that, 9,500 miles were personal and commuting miles. Stephanie will take the standard business mileage rate.

Stephanie is paying on her student loan from 2019, when she completed her undergraduate degree.

Stephanie is working towards her Juris Doctorate degree to start a new career as a Lawyer.

She took a few college courses this year at an accredited college.

Stephanie took an early distribution of $5,000 from her IRA in April. She used $2,400 of the IRA distribution to pay her educational expenses for the current year.

If Stephanie has a refund, she would like it deposited into her checking account.

Advanced Scenario 8: Retest Questions

1. How can Stephanie prevent having a balance due next year?

a. She can increase the withholding on a new Form W-4.

b. She can make estimated tax payments.

c. She can do nothing and file as usual.

d. Both a and b.