INSTRUCTIONS

Based on the facts below, prepare for Shelli Thomson her US $($federal$)$ individual income tax return $($Form $1040),$ her Schedule A $($Itemized Deductions$),$ and Schedule $3($Additional Credits and Payments$).$ You must upload on Canvas the completed forms and schedules as a Word document or PDF$.$ Screen shots will not be accepted. You can use either the forms and schedules posted on Canvas or download the forms and schedules from

irs.gov.

You are to include as a Word document or PDF $($screen shots will not be accepted$)$ a paper stating the reasons why you:

Included and did not include amounts in income;

Deducted and did not deduct amounts from income;

Claimed and did not claim tax credits; and

Claimed the standard deduction or itemized the deductions.

FACTS

On June $1$ of the current year, Shelli Thomson started a new job as a chemist for Sargent Chemical Corp

Prior to starting her new job, she received unemployment payment from January $1$ to May $31$

In Jan of the current year, Shelli filed for bankruptcy

Shelli Thomson's

a$.$ Birthday is January $1,1970$

b$.$ Social Security number is $111-11-1113$;

c$.$ Address is $7605$ Walnut Street, Los Angeles, CA $90013$

d$.$ Tax return filing status is head of household

e$.$ Her ordinary income tax rate is $10\%.$

The following information is about Shelli's daughter, Amy, whose adoption was finalized on January $31$ of the current year. Amy's

a$.$ Birthday is January $1,2019$

b$.$ Social Security number is $111-11-1115$

c$.$ Address is $7605$ Walnut Street, Los Angeles, CA $90013$

d$.$ Cannot be claimed as a dependent of another taxpayer

e$.$ She has lived Shelli from February $1$ of the current year to December $31$ of the current year

The following information is about Shelli's daughter, Amy, whose adoption was finalized on January $31$ of the current year. Amy's

a$.$ Birthday is January $1,2019$

b$.$ Social Security number is $111-11-1115$

c$.$ Address is $7605$ Walnut Street, Los Angeles, CA $90013$

d$.$ Cannot be claimed as a dependent of another taxpayer

e$.$ She has lived Shelli from February $1$ of the current year to December $31$ of the current year

f$.$ Shelli provided $100\%$ of her support

On the Form $1040,$ multiply the total amount of income you entered on the Form $1040$ by $10\%($Shelli$\text{'}$s income tax rate$)$ and enter that amount on the Form $1040.$

The standard deduction for the current year is $$12,000$

During the current year, Shelli:

a$.$ Earned $$50,000$ in wages as a chemist. Her employer, Sargent Chemical Corp, did not withhold federal and state income taxes from her wages

b$.$ Received $$5,000$ in unemployment payments. Federal and state taxes were not withheld from her unemployment payments.

c$.$ Received $$1,000$ in cancellation of debt $($COD$)$ income because, as part of the bankruptcy proceedings, the credit card company, Comerica, forgave the $$1,000$ balance on her credit card

d$.$ Received $$200$ of interest on her savings bank account

e$.$ Paid $$8,000$ in out$-$of$-$pocket medical expenses including co$-$pays for prescription drugs and doctor appointments

f$.$ Paid property $($real estate$)$ taxes of $$5,000$ to the city of Los Angeles

g$.$ Paid $$10,000$ in home mortgage interest on her home mortgage. Her mortgage was $$100,000$ and was secured by her home

h$.$ Incurred a $$2,000$ theft loss. The theft did not occur in a federally declared disaster area

i$.$ Incurred a $$3,000$ casualty loss after her home was damaged by a tornado in a federally declared disaster area

j$.$ Donated $$200$ in cash to a tax$-$exempt charity

k$.$ Paid $$1,000$ to the adoption agency as part of the process of adopting Amy. Shelli's employer did not reimburse her for this expense

Paid $$500$ to Little Lamb Nursery School to care of Amy on the days she worked. Her employer did not reimburse her for this expense