The forms need to be filled out: 1040, Schedule 1, Schedule 2, Schedule A, form 5329 & Schedule 881

• Use the following information to complete Bob and Melissa Grant’s 2022 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps.
• The forms, schedules, and instructions can be found at the IRS website (www.irs.gov). The instructions can be helpful in completing the forms.

Facts:

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

 

The following information relates to the Grants’ tax year:

• Bob’s Social Security number is 987-45-1235
• Melissa’s Social Security number is 494-37-4893
• Jared’s Social Security number is 412-32-5690
• Alese’s Social Security number is 412-32-6940
• The Grants’ mailing address is 95 Hickory Road, Lexington, Kentucky 40502.
• Jared and Alese are tax dependents for federal tax purposes

Bob Grant’s Forms W-2 provided the following wages and withholding for the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
National Storage	$66,200	$8,000	$3,750
Lexington Little League	$4,710	0	0

Melissa Grant’s Form W-2 provided the following wages and withholding for the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
Jensen Photography	$44,500	$5,450	$2,225

All applicable and appropriate payroll taxes were withheld by the Grants’ respective employers.  All the Grant family was covered by minimum essential health insurance during each month in 2022.  The insurance was provided by Bob’s primary employer, National Storage.

The Grants also received the following during the year:

Interest income from First Kentucky Bank                                        $130

Interest income from City of Lexington, KY Bond                           $450

Interest income from U.S. Treasury Bond                                         $675

Interest income from Nevada State School Board Bond                    $150

Workers’ compensation payments to Bob                                          $4,350

Disability payments received by Bob due to injury                           $3,500

• National Storage paid 100% of the premiums on the policy and included the premium payments in Bob’s taxable wages

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, 2022.  The annuity will pay Melissa $15,000 per year for ten years (beginning with this year).  The $15,000 payment was reported to Melissa on Form 1099-R for the current year (box 7 contained an entry of “7” on the form).

The Grants did not own, control or manage any foreign bank accounts nor were they grantors or beneficiaries of a foreign trust during the tax year. Also, the Grants did not buy, sell, exchange, or otherwise dispose of any financial interest in any virtual currency.

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

Dentist/Orthodontist (unreimbursed by insurance)                                        $ 10,500

Doctor fees (unreimbursed by insurance)                                                      $   2,625

Prescriptions (unreimbursed by insurance)                                                    $   1,380

KY state tax payment made on 4/15/2022 for 2021 tax return liability        $   1,350

Real property taxes on residence                                                                   $   3,800

Mortgage interest on principal residence                                                       $  18,560

Interest paid on borrowed money to purchase the City of

Lexington, KY municipal bonds                                                        $      400

Interest paid on borrowed money to purchase

U.S. Treasury bonds                                                                           $     240

Contribution to the Red Cross                                                                        $  1,000

Contribution to Senator Rick Hartley’s Re-election Campaign                     $  2,500

Contribution to First Baptist Church of Kentucky                                         $  6,000

Fee paid to Jones & Company, CPAs for tax preparation                             $     200

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

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

The Grants both want to contribute to the Presidential Election Campaign Fund.  The Grants 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.