Jack (888-88-9999) and Jill (051-88-9999) Baker live on 100 Hill Street, Bucket, CA. They have one son, Michael (007-00-2016) who is 5. Jack works as a surgeon earning $85,000 a year. Jill runs a real estate business. Jack had $5,000 withheld for Federal tax and $1,200 withheld for State income tax. Jack also paid $780 in SDI to the state of California.

Jill is a licensed realtor working in the Bucket, CA area. Jill sold 2 houses and earned commission of $35,000. Jill maintained a properly documented mileage log of all her travel. She traveled a total of 10,000 miles. Jill is using the standard mileage rate for this deduction as she is terrible about keeping receipts (SMR = .575 per mile). Jill uses her personal cell phone for business 50% of the time. Her yearly cell phone bill was $800. Jill also purchased a whole new wardrobe at Macy’s after learning that she had been losing customers as she did not present a high enough image for the area she was selling in. Her wardrobe cost $3,000, she made wise choices and purchased items that could be combined into various outfits. Jill paid advertisers $1,200 and house cleaners $400 to clean her personal home as she did not have time to clean house. Jill has a home office exclusively used for business. The home’s total utilities for the year were $1,200 and Depreciation on the home as a whole would be $3,000. Her office space in the home is 200 square feet, the square footage of the entire house was 1500.

Jack and Jill also rent out their prior residence. They receive $10,000 in rental income and have depreciation in the amount of $4,000, interest in the amount of $6,000 and property taxes in the amount of $1,500. Their prior residence is on 140 Muffet Lane in Tuffet, CA.

Jack and Jill paid $21,000 in mortgage interest and $6,000 in property taxes. They also paid $5,000 in medical expenses as their insurance policy did not cover a cosmetic procedure Jill wanted done. They adopted a rescue puppy during the year for $600, they wrote the check out for $3,330 since they really wanted to help out the 501c3 organization they bought the puppy from.

Prepare Form 1040, Schedule 1, Schedule A, Schedule C, Schedule E, Form 540 and Schedule CA for Form 540. Ignore Self Employment Tax.

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Preparing Jack and Jill Bakers tax return involves filling out several forms including Form 1040 Schedule 1 Schedule A and Schedule C Below is a summa... View the full answer