Question: Note: This problem is for the 2023 tax year. Daniel B. Butler and his spouse Freida C. Butler file a joint return. The Butlers live

Note: This problem is for the 2023 tax year.

Daniel B. Butler and his spouse Freida C. Butler file a joint return. The Butlers live at 625 Oak Street in Corbin, KY 40701. Dan's Social Security number is 111-11-1112, and Freida's is 123-45-6780. Dan was born on January 15, 1972, and Freida was born on August 20, 1972.

During 2023, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home:

  1. Gina, their daughter, age 22, a full-time student, who married on December 21, has no income of her own and did not file a joint return with her husband, Casey, who earned $10,600 during 2023. Gina's Social Security number is 123-45-6788.
  2. Willie, their son, age 19, graduated high school in May 2023. He is taking a leap year and will not begin college until 2024. He had gross income of $6,300 in 2023. Willie's Social Security number is 123-45-6787.
  3. Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786.

Dan was employed as a manager by WJJJ, Inc. (employer identification number 11-1111111, 604 Franklin Street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899 Central Street, Corbin, KY 40701). Selected information from the W-2 forms provided by the employers is presented below. Dan and Freida use the cash method.

Line Description Dan Freida
1 Wages, tips, other compensation $74,000 $86,000
2 Federal income tax withheld 11,000 12,400
17 State income tax withheld 2,960 3,440

Freida sold a house on December 30, 2023, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W-2) on the January 10, 2024, closing date.

Other income (as reported on 1099 Forms) for 2023 consisted of the following:

Dividends on CSX stock (qualified) $4,200
Interest on savings at Second Bank 1,600
Interest on City of Corbin bonds 900
Interest on First Bank CD 382

The $382 from First Bank was an original issue discount. Dan and Freida collected $16,000 on the First Bank CD that matured on September 30, 2023. The CD was purchased on October 1, 2020, for $14,995, and the yield to maturity was 3.3%.

Dan participated on a game show and won a cash prize of $7,000.

In addition to the above information, Dan and Freida's itemized deductions included the following:

Paid on 2023 Kentucky income tax $700
Personal property tax paid 600
Real estate taxes paid 1,800
Interest on home mortgage (Corbin S&L) 4,900

Sales tax from the sales tax table is $1,860. Dan and Freida made Federal estimated tax payments of $6,000. They have never owned or used any digital assets, and they do not wish to contribute to the Presidential Election Campaign. The Kentucky income tax rate is 4%.

Required:

Compute Dan and Freida's 2023 Federal income tax payable (or refund due). Use Form 1040 and Schedules 1, B, 8812 and the Qualified Dividends and Capital Gain Tax Worksheet to complete this tax return. If there is a tax overpayment, the Butlers would like a refund. If additional tax is due, assume no underpayment penalty applies.

It may be necessary to complete the tax schedules before completing Form 1040.

  • Enter all amounts as positive numbers.
  • If an amount box does not require an entry or the answer is zero, enter "0".
  • When computing the tax liability, do not round your immediate calculations.
  • If required, round your answers to the nearest dollar.
  • Make realistic assumptions about any missing data.
  • Use the Tax Rate Schedule provided. Do not use the Tax Tables.

Form 1040

Question Content Area

Complete the Butlers' Form 1040.

Form

1040

Department of the TreasuryInternal Revenue Service U.S. Individual Income Tax Return 2023 OMB No. 1545-0074 IRS Use Only
For the year Jan. 1-Dec. 31, 2023, or other tax year beginning , , ending , See separate instructions.
Your first name and middle initial Daniel Butler Last name Your social security number 111-11-1112
If joint return, spouse's first name and middle initial Freida C Butler Last name Spouse's social security number 123-45-6780
Home address (number and street). If you have a P.O. box, see instructions. 625 Oak Street Apt. no.

Presidential Election Campaign Doyou, or your spouse if filing jointly, want $3 to go to this fund. Selecting an option below will not change your tax or refund.

YesNoNo

City, town, or post office. If you have a foreign address, also complete spaces below. Corbin, KY 40701 State ZIP code
Foreign country name Foreign province/state/county Foreign postal code
Filing Status SingleMarried filing jointlyMarried filing separately (MFS)Head of household (with qualifying person) (HOH)Qualifying surviving spouse (QSS)Married filing jointly
Digital Assets At any time during 2023, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, Assets exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? (See instructions.) YesNoYes
Standard Deduction

Someone can claim:

You as a dependentYour spouse as a dependentSpouse itemizes on a separate return or you were a dual-status alienNoneYour spouse as a dependent

Age/Blindness

You:

Were born before January 2, 1959Are blindWere born before January 2, 1959, Are blindNoneNone

Spouse:

Was born before January 2, 1959Is blindWas born before January 2, 1959, Is blindNoneNone

Dependents If more than four dependents, see instructions and check here . . . . . . . . (see instructions): (2) Social security number (3) Relationship to you (4) Check the box if qualifies for (see instructions):
(1) First name Last name Child tax credit Credit for other dependents
Gina Butler 123-45-6788 Child YesNoNo YesNoYes
Willie Butler 123-45-6787 Child YesNoYes YesNoNo
Income Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. If you did not get a Form W-2, see instructions. 1a Total amount from Form(s) W-2, box 1 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . 1a

fill in the blank 396e38024028ffb_11

b Household employee wages not reported on Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . 1b
c Tip income not reported on line 1a (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . 1c
d Medicaid waiver payments not reported on Form(s) W-2 (see instructions) . . . . . . . . . . . 1d
e Taxable dependent care benefits from Form 2441, line 26 . . . . . . . . . . . . . . . . . . . . . . 1e
f Employer-provided adoption benefits from Form 8839, line 29 . . . . . . . . . . . . . . . . . . . 1f
g Wages from Form 8919, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1g
h Other earned income (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1h
i Nontaxable combat pay election (see instructions) . . . . . . . . 1i
z Add lines 1a through 1h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1z

fill in the blank 396e38024028ffb_12

Attach Sch. B if required.

2a Tax-exempt interest . . 2a

fill in the blank 396e38024028ffb_13

b Taxable interest . . . . . . . . . . 2b

fill in the blank 396e38024028ffb_14

3a Qualified dividends . . . 3a

fill in the blank 396e38024028ffb_15

b Ordinary dividends . . . . . . . . 3b

fill in the blank 396e38024028ffb_16

4a IRA distributions . . . . 4a b Taxable amount . . . . . . . . . . 4b

Standard Deduction for-

  • Single or Married filing separately, $13,850
  • Married filing jointly or Qualifying surviving spouse, $27,700
  • Head of household, $20,800
  • If you checked any box under Standard Deduction, see instructions.
5a Pensions and annuities 5a b Taxable amount . . . . . . . . . . 5b
6a Social security benefits 6a b Taxable amount . . . . . . . . . . 6b
c If you elect to use the lump-sum election method, check here (see instructions) . . . . .
7 Capital gain or (loss). Attach Schedule D if required. If not required, check here . . . . . 7
8 Additional income from Schedule 1, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

fill in the blank 396e38024028ffb_17

9 Add lines 1z, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income . . . . . . . . . . . . . . . 9

fill in the blank 396e38024028ffb_18

10 Adjustments to income from Schedule 1, line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Subtract line 10 from line 9. This is your adjusted gross income . . . . . . . . . . . . . . . . 11

fill in the blank 396e38024028ffb_19

12 Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . . . . . 12

fill in the blank 396e38024028ffb_20

13 Qualified business income deduction from Form 8995 or Form 8995-A . . . . . . . . . . . . . . 13
14 Add lines 12 and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

fill in the blank 396e38024028ffb_21

15 Subtract line 14 from line 11. If zero or less, enter -0-. This is your taxable income . . . 15

fill in the blank 396e38024028ffb_22

BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2023)

Form 1040 (2023) Daniel and Freida C Butler 111-11-1112 Page 2
Tax and Credits 16 Tax (see instructions). Check if any from Form(s): 1 8814 2 4972 3 . . 16

fill in the blank 396e38024028ffb_23

17 Amount from Schedule 2, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Add lines 16 and 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

fill in the blank 396e38024028ffb_24

19 Child tax credit or credit for other dependents from Schedule 8812 . . . . . . . . . . . . . . . . 19

fill in the blank 396e38024028ffb_25

20 Amount from Schedule 3, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21 Add lines 19 and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

fill in the blank 396e38024028ffb_26

22 Subtract line 21 from line 18. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . 22

fill in the blank 396e38024028ffb_27

23 Other taxes, including self-employment tax, from Schedule 2, line 21 . . . . . . . . . . . . . . 23
24 Add lines 22 and 23. This is your total tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

fill in the blank 396e38024028ffb_28

Payments 25 Federal income tax withheld from: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25a

fill in the blank 396e38024028ffb_29

b Form(s) 1099 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25b
c Other forms (see instructions) . . . . . . . . . . . . . . . . . . . . . . 25c
d Add lines 25a through 25c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25d

fill in the blank 396e38024028ffb_30

If you have a qualifying child, attach Sch. EIC.

26 2023 estimated tax payments and amount applied from 2022 return . . . . . . . . . . . . . . 26

fill in the blank 396e38024028ffb_31

27 Earned income credit (EIC) . . . . . . . . . . . . . . . . . . . . . . . . . 27
28 Additional child tax credit from Schedule 8812 . . . . . . . . . . . . 28
29 American opportunity credit from Form 8863, line 8 . . . . . . . . 29
30 Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
31 Amount from Schedule 3, line 15 . . . . . . . . . . . . . . . . . . . . . 31
32 Add lines 27, 28, 29, and 31. These are your total other payments and refundable credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
33 Add lines 25d, 26, and 32. These are your total payments . . . . . . . . . . . . . . . . . . . . . 33

fill in the blank 396e38024028ffb_32

Refund 34 If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

fill in the blank 396e38024028ffb_33

35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here . . 35a

fill in the blank 396e38024028ffb_34

Direct deposit? b
Routing number c Type: Checking Savings
See instructions. d
Account number
36 Amount of line 34 you want applied to your 2024 estimated tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Amount You Owe 37 Subtract line 33 from line 24. This is the amount you owe. For details on how to pay, go to www.irs.gov/Payments or see instructions . . . . . . . . . . . 37
38 Estimated tax penalty (see instructions) . . . . . . . . . . . . . . . . 38
Third Party Designee Do you want to allow another person to discuss this return with the IRS? See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes. Complete below. No
Designee's name Phone no. Personal identification number (PIN)
Sign Here Joint return? See instructions. Keep a copy for your records. Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature Date Your occupation Manager If the IRS sent you an Identity Protection PIN, enter it here (see inst.)
Spouse's signature. If a joint return, both must sign. Date Spouse's occupation Salesperson If the IRS sent your spouse an Identity Protection PIN, enter it here (see inst.)
Phone no. Email address
Paid Preparer Use Only Preparer's name Preparer's signature Self-Prepared Date PTIN Check if: Self-employed
Firm's name Phone no.
Firm's address Firm's EIN
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2023)

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