Tax problem #2

Forms needed for a complete return are:

Form 1040

Schedule 1

Schedule A

Form 4952

Please complete the 2020 federal income tax return for Bob and Melissa Johnson. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps.

Bob (age 43) and Melissa (age 53) Johnson are married and live in Lexington Kentucky. The Johnsons have two children: Jared, age 15, and Alese, age 12. The Johnsons would like to file a joint tax return for the year.

The following information relates to the Johnsons tax year:

• Bobs Social Security Number is 987-45-1235
• Melissas Social Security Number is 494-37-4893
• Jareds Social Security Number is 412-32-5690
• Aleses Social Security Number is 412-32-6940
• The Johnsons mailing address is 95 Hickory Road, Lexington, Kentucky 40502
• Jared and Alese are tax dependents for federal tax purposes

Bob Johnsons Form W-2 provided the following wages and withholding for the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
National Storage	$69,200	$8,000	$3,550
Lexington Little League	$4,510	0	0

Melissa Johnsons From W-2 provided the following wages and withholding for the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
Jensen Photography	$46,500	$5,450	$2,425

All Applicable and appropriate payroll taxes were withheld by the Johnsons respective employers. All the Johnson family was covered by minimum essential health insurance during each month in 2020. The insurance was provided by Bobs primary employer, National Storage.

The Johnsons also received the following during the year:

Interest Income from First Kentucky Bank	$150
Interest Income from City of Lexington, KY Bond	$450
Interest Income from U.S. Treasury Bond	$700
Interest Income from Nevada State School Board Bond	$150
Workers Compensation payments to Bob	$4,350
Disability payments received by Bob due to injury National Storage paid 100% of the premiums on the policy and included the premium payments in Bobs taxable wages	$3,500

Melissa received the following payments due to a lawsuit she filed for damages sustained in a car accident:

• Medical Expenses for Physical injuries $ 2,500
• Emotional Distress( from having been Physically injured) $12,000
• Punitive Damages $10,000

Total $24,500

Eight years ago, Melissa purchased an annuity contract for $88,000. She received her first annuity payment on January 1, 2020. The annuity will pay Melissa $15,000 per year for ten years (beginning this year). The $15,000 payment was reported to Melissa on form 1099-R for the current year (box 4 contained an entry of 7 on the form).

The Johnsons did not own, control or manage any foreign bank accounts nor were they grantors or beneficiaries of a foreign trust during the year.

The Johnsons paid or incurred the following expenses during the year:

Dentist/Orthodontist (unreimbursed by insurance)	$10,500
Doctor fees (unreimbursed by Insurance)	$3,025
Prescriptions (unreimbursed by insurance)	$980
KY state tax payments made on 4/15/20 for the 2019 tax return liability	$1,350
KY state income taxes withheld during 2020	$5,975
Real Property taxes on residence	$3,900
Vehicle registration fee based upon age of vehicle	$1,350
Mortgage interest on principal residence	$18,500
Interest paid on borrowed money to purchase the City of Lexington, KY municipal bond	$400
Interest paid on borrowed money to purchase U.S Treasury Bonds	$240
Contribution to the Red Cross	$1,000
Contribution to Senator Rick Hartleys Re-Election Campaign	$3,500
Contribution to First Baptist Church of Kentucky	$6,000
Fee paid to Jones & Company, CPA for tax preparation	$200

In addition, Bob drove 6,750 miles commuting to work and Melissa drove 8,230 miles commuting to work. The Johnsons have represented to you that they maintained careful logs to support their respective mileage.

The Johnsons drove 465 miles in total to receive medical treatment at a hospital in April.

The Johnsons both wanted to contribute to the Presidential Election Campaign Fund. The Johnsons would like to receive a refund (if any) of any tax they may have overpaid for the year. Their preferred method of receiving the refund is by check.