Module $02$ Course Project $-1040$ Form

Module $02$ Content

Use the information provided below to complete the following

Here is where you can navigate to the IRS website and download Form $1040$

Complete the taxpayer information section

Choose the appropriate filing status

Complete Line $1$ Salaries and wages from the taxpayer's W$-2$ forms.

Complete Line $25$a $-$Federal income tax withheld from Form W$-2$

Enter total withholding in Line $25$d$.$ Comprehensive Tax Problem

Joseph and Diane Smith

$1580$ West Street

Chatham, VA $24531$

Joseph and Diane are both $35$ and have no dependents. If your clients receive a refund, they want the full amount refunded to them. Diane is currently pregnant and will give birth during the next tax year.

Joseph $$ SSN: $400-20-0100$

Diane $$ SSN: $200-40-8000$

Joseph works as a salesman. During the current year, Joseph earned a total compensation from his job of $$125,000.$ Following are the deductions from his pay.

Federal Withholding $$20,000$

FICA $($Social Security$)$ Withholding $ $7,347$

Medicare $ $1,813$

Virginia Withholding $ $4,000$

Diane is a nurse and earned total compensation of $$45,400.$ Following are the deductions from her pay.

Federal Withholding $ $5,000$

FICA $($Social Security$)$ Withholding $ $2,815$

Medicare $ $658$

Virginia Withholding $ $2,000$

Joseph and Diane have investments in stocks and have a saving account at a local bank. During the current year, they earned $$1,450$ in interest from the Bank of Virginia. They received qualified stock dividends of $$5,950$ from GE stock. They also traded in the stock market during the year and had the following results $($just enter net amounts in the proper schedule$).$

Long Term Capital Gain $ $4,900$

Long Term Capital Loss $$(3,200)$

Short Term Capital Gain $ $0$

Short Term Capital Loss $$(7,800)$

They have no loss carryover from previous years.

Joseph also owns side consulting business which he runs as a sole proprietor. He uses the cash method to account for this activity. He uses a room in his home exclusively for activities related to this business. Joseph has opted to use the simplified method for a deduction for the business use of his home amounting to $$1,500.$

During the year, Joseph earned and received $$12,500$ from clients related to this business. His expenses were as follows:

Advertising $$175$

Supplies $$500$

Legal Fees $$750$

Liability Insurance $$600$

The couple have the following additional expenses for the year:

Health Insurance $($after$-$tax$)$ $ $4,400$

Doctor bills $ $470$

Real estate taxes $ $2,200$

Personal property taxes $ $400$

Mortgage Interest $$15,600$

Charitable contributions $$ cash $ $9,000$

Charitable contributions $$ Stock

GE stock owed $5$ years:

Fair Market Value $($FMV$)$ $ $8,000$

Adjusted basis $ $2,000$

Tax preparation fees $ $750$

Note: Ignore any potential qualified business income deduction for the purposes of this project