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:
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.
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.
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 ServiceU.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
FilingStatus
SingleMarried filing jointlyMarried filing separately (MFS)Head of household (with qualifying person) (HOH)Qualifying surviving spouse (QSS)Married filing jointly
DigitalAssets
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
IncomeAttach Form(s)W-2 here. Alsoattach FormsW-2G and1099-R if taxwas withheld. If you did not get a Form W-2, see instructions.
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 . . . . . . . . . . .
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)
SignHere 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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