income Tax I

Critical Thinking$/$Problem Solving

Assessment

Below is the information that was used to prepare the attached Schedule A for Michael and Sara

Carlson. However, when the accountant was preparing the Schedule A$,$ he made some errors. After

reviewing the information, find the errors, note the correct treatment, and prepare a corrected

Schedule A$.$

INCOME

Wages $$ Michael $$105,000$

Wages $$ Sara $62,000$

Dividend Income $5,500$

Gambling Winnings $3,000$

Adjusted Gross Income $$175,500$

DEDUCTIONS

Medical Expenses

Hospital Bills $$6,200$

Doctor Bills $3,120$

Prescriptions $4,200$

Vitamins $900$

Health Club Fee $1,200$

Vet Expenses for Dog $800$

Insurance Reimbursements $2,200$

This is how the accountant calculated the medical expenses.

Hospital Bills $$6,200$

Doctor Bills $3,120$

Prescriptions $4,200$

Vitamins $900$

Vet Expenses for Dog $800$

Insurance Reimbursements $2,200$

Total $$17,420$

Taxes

WI withholding $$ Michael $$5,150$

WI withholding $$ Sara $3,210$

Prior Year WI Refund $$620$

Property Taxes $$ Main Home $5,150$

Property Taxes $$ Cabin in the Woods $2,200$

Property Taxes $$ Disney Condo $4,810$

Car Registration $($not based on value$)320$

Interest

Mortgage Interest $$ Main Home $3,710$

Mortgage Interest $$ Cabin in the Woods $1,800$

Mortgage Interest $$ Disney Condo $4,050$

Interest on Investment Loan $900$

Interest on Car Loan $870$

Interest on Credit Card $620$

Interest on Student Loan $3,200$

Charitable Contributions

Documented contributions to Church $$1,910$

Documented Contributions to Boy Scouts $2,080$

Contribution to Republican Party $900$

Contribution to Go Fund Me for friend $840$

Goodwill donation $$ FMV $450$

Goodwill donation $$ cost $1,800$

Other Deductions

Gambling Losses $$7,000$

Required

$1.$ Complete the attached grid identifying the error, why it is an error, and the correct

treatment. There are $10$ errors.

$2.$ Complete a corrected Schedule A$.$