Question: NEED TO PREPARE FOR A TAX RETURN - PLEASE let me know how to file the part in BOLD. Facts Zach (age 44) and Kelly
NEED TO PREPARE FOR A TAX RETURN - PLEASE let me know how to file the part in BOLD.
Facts Zach (age 44) and Kelly (age 44) have been married for 24 years. They have an 11- year-old daughter, Jessie, who lives with them. They also have twin sons, Albert and Samuel (both age 22). Albert is a full-time student at the University of Illinois and he also works part-time at a local diner named "The Max," where he earned wages of $12,000. Albert lives at home and his tuition and fees are completely covered by his wrestling athletic scholarship (the scholarship only covers tuition and fees). Albert provides 50% of his own support and his parents provide 50%. Samuel is unemployed, but is taking college courses on a part-time basis and lives at home with Zach and Kelly (his parents provide 100% of his support). Zach and Kelly paid $5,000 in tuition for Samuel's part-time classes.
Zach works in management and earned W-2 wages of $70,000. He also had $7,000 in federal tax withheld and $3,000 in State of Illinois taxes withheld.
Kelly is a self-employed architect. During the year, she operated a Single Member LLC (which is taxed on Schedule C). The business uses the cash method of accounting. She received $102,000 in cash payments for services provided during the year. During the year, Kelly paid $18,000 to rent her office space (the payment covered the period from July 1, 2019 to June 30, 2020). She incurred advertising costs of $6,000, legal fees of $5,000, business insurance of $2,000, and supply expenses of $10,000. She also had meal expenses of $3,000 taking clients to dinner. She incurred $2,500 in ticket expenses entertaining clients at sporting events.
Kelly made no payments requiring the issuance of a Form 1099. Kelley made estimated payments during the year to the IRS of $6,000 and estimated state tax payments of $2,000.
Zach and Kelly received $1,200 of interest income from bonds issued by the City of Savoy and $3,500 of interest income from a money market fund at Vanguard (Form 1099-INT).
Zach and Kelly rented their home on Air-BNB during the weekend (3 nights) of commencement for the University of Illinois, earning $3,000. Air-BNB charged them a $300 commission.
Zach won $800 playing slot machines at a local casino. He lost $900 playing the slots on a separate trip to the casino.
The couple also paid $20,000 in principal payments, $9,000 in interest payments, and $8,000 in real estate taxes on their primary residence.
They incurred $8,000 in unreimbursed medical expenses. And, they made $15,000 in cash contributions to qualifying charitable organizations.
They paid $3,000 in student loan interest.
In addition, during 2019, the couple received a state tax refund of $3,000.
On their 2018 tax return they claimed $10,000 (the limit) of their $12,000 in state and local taxes as an itemized deduction (their itemized deductions exceeded their standard deduction by $3,000). The family lives at 123 Taxman Lane, Champaign, IL 61822. Their family SSNs are as follows: Zach (123-44-5555); Kelly (123-55-6666); Jessie (123-66-7777); Albert (123- 77-8888); and Samuel (123-88-9999).
The couple wishes to file jointly. If the couple overpaid tax, they would like the entire overpayment refunded. The couple is not subject to AMT and were not subject to AMT in a prior year. Based on their prior year tax and AGI, they will not be subject to any underpayment of estimated tax penalty. They do not wish to contribute to the Presidential Election Campaign fund. They do not have foreign investments.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
