Richard McCarthy $($born $2/14/1969$; Social Security number $100-10-9090)$ and Christine McCarthy $($born $6/1/1971$; Social Security number $101-21-3434)$ have a $19-$year$-$old son Jack, $($born $10/2/2004$; Social Security number $555-55-1212),$ who is a full$-$time student at the University of Key West. The McCarthys also have a $12-$year$-$old daughter Justine, $($born $12/09/2011$; Social Security number $444-23-1212),$ who lives with them. The McCarthys can claim a $$2,000$ child tax credit for Justine and a $$500$ other dependent credit for Jack. Richard is the CEO at a paper company. His $2023$ Form W$-2($see separate tab$)$

Christine is an optometrist and operates her own practice $($The Eyes of March$)$ in town as a sole proprietor. The shop address is $1030$ Morgan Highway, Clarks Summit, PA $18411$ and the business code is $621320.$ Christine keeps her books on the cash basis and her bookkeeper provided the following information:

Gross sales $$290,000$

Returns $7,300$

Inventory:

Beginning inventory $$25,000$

Purchases $122,000$

Ending inventory $28,000$

Rent $41,000$

Insurance $11,500$

Professional fees $3,300$

Payroll $36,000$

Payroll taxes $2,900$

Utilities $4,000$

Office expenses $2,245$

Depreciation $5,000$

Christine paid her rent in $2023$ month$-$to$-$month, but paid $$24,000$ in December $2023$ for a $12-$month lease on her office for all of $2024.$ One of Christine$$s customers is a large state prison that purchases special eye glasses for the inmates that meet prison safety standards. Because the order is large, Christine received a $$20,000$ advance payment in December $2023$ for glasses she delivered in January $2024.$ The rent and advance payment are included in her financial figures above.

The McCarthys have a nanny$/$housekeeper whom they paid $$14,000$ during $2023.$ They did not withhold income or FICA taxes. The McCarthys paid Pennsylvania state unemployment tax of $$380$ in $2023.$

Christine received a $2023$ Form $1099-$INT from the National Bank of Scranton that listed interest income of $$23,500.$ Note that McCarthys reasonably allocate $$751$ to state income tax expense for purposes of the net investment income tax. Christine$$s uncle that lives in Scotland dies in $2023$ and left her a checking account at the Royal Bank of Glasgow with a balance of $18,000$ or about US$$21,170.$ The account did not earn any interest. Christine reported the account on the FinCEN website. Richard received a Form $1098-$E $($presented below$)$ reporting the student loan interest he paid.

$$ CORRECTED $($if checked$)$

RECIPIENT'S$/$LENDER$\text{'}$S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone number

Sallie Mae Loan Servicing Center

$12061$ Bluemont Way, V$3419$

Reston, VA $20190$ OMB No$.1545-1576$

$2023$

Form $1098-$E

Student

Loan Interest

Statement

RECIPIENT'S TIN

$12-4454123$ BORROWER'S TIN

$100-10-90901$

$ Student loan interest received by lender

$2,700\mathrm{.}00$ Copy B

For Borrower

This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for student loan interest.

BORROWER'S name

Richard McCarthy

Street address $($including apt. no$.)$

$32$ Sleepy Hollow Road

City or town, state or province, country, and ZIP or foreign postal code

Clarks Summit, PA $18411$

Account number $($see instructions$)2$ If checked, box $1$ does not include loan origination fees and$/$or capitalized interest for loans made before September $1,2004...$

Form $1098-$E $($keep for your records$)$ www$.$irs.gov$/$Form$1098$E Department of the Treasury $-$ Internal Revenue Service

The McCarthys received a Form $1099-$G from Pennsylvania that reported a $$477$ state income tax refund from $2022.$ The McCarthys filed a Schedule A in $2022$ and had $$14,223$ of state income tax expense that was limited to a $$10,000$ deduction.

The McCarthys paid the following in $2023$:

Home mortgage interest reported on Form $1098$

on mortgage of less than $$750,000$ $$15,600$

Property taxes $5,767$

Estimated state income tax payments $2,500$

Estimated Federal income tax payments $4,700$

Charitable contributions $($all cash$)7,800$

I need help with

Complete the McCarthys' federal tax return for $2023.$ Use Form $1040,$ Schedule $1,$ Schedule $2,$ Schedule A$,$ Schedule B$,$ Schedule C$,$ Schedule H$,$ Schedule SE$,$ Form $8995,$ Form $8959,$ and Form $8960$ to complete this tax return.