What is the correct amount reported as wages on Form 1040, U .S Individual Income Tax Return? $________ .

12 . Oscars combat pay is not taxable . a . True b . False

13 . What is the amount of the Hernandezs earned income credit? a . $1,285 b . $2,466 c . $5,828 d . $3,400

14 . The net rental income (rental income minus expenses) is figured using Schedule E and reported as rental income on Form 1040, Schedule 1, Additional Income and Adjustments to Income . a . True b . False

15 . Oscar cannot take a rental expense deduction for which of the following items? a . Depreciation b . Repairs c . Management fees d . Value of his labor

y Scenario 5: Oscar and Patricia Hernandez T12 of 194 Directions Using the tax software, complete the tax return, including Form 1040 and all appropri- ate forms, schedules, or worksheets. Answer the questions following the scenario. Note: When entering Social Security numbers (SSNS) or Employer ldentification Numbers (EINS), replace the Xs as directed, or with any four digits of your choice. Interview Notes Oscar and Patricia are married and want to file a joint return. Patricia receives Social Security disability benefits. Oscar and Patricia have eight-year-old twins, Guillermo and Maria, who lived with them the entire year. Patricia is receiving a disability pension from her former employer. She has not reached minimum retirement age. Oscar was deployed to Qatar and entered a combat zone on April 20, 2019 and is scheduled to return to the U.S on April 15, 2020. Oscar has rental property, which he placed into service in 2016 Rental property: Oscar is an active participant. Single family residence, 3571 Oak Street, Your City, Your State. - Purchased property: 06/03/2009. Rented: 1/1/2019 - 12/31/2019. Annual rental income: $13,500. Insurance: $1,500. Management fees: $950. Oscar paid $625 to replace a broken doorbell, shower head, leaky faucet and unclog drains. He learned how to complete these repairs after watching Do-It- Yourself videos on the internet. He estimates his time for completing the repairs is worth $1,000, which is equivalent to professional electrician and plumber labor cot. Real estate property tax: $1,500. Mortgage Interest: $3,625. - Depreciation: $2,000. Oscar did not make any payments that would require him to file Form 1099. Oscar and Patricia did not itemize last year and do not have enough deductions to itemize this year. y Scenario 5: Oscar and Patricia Hernandez T12 of 194 Directions Using the tax software, complete the tax return, including Form 1040 and all appropri- ate forms, schedules, or worksheets. Answer the questions following the scenario. Note: When entering Social Security numbers (SSNS) or Employer ldentification Numbers (EINS), replace the Xs as directed, or with any four digits of your choice. Interview Notes Oscar and Patricia are married and want to file a joint return. Patricia receives Social Security disability benefits. Oscar and Patricia have eight-year-old twins, Guillermo and Maria, who lived with them the entire year. Patricia is receiving a disability pension from her former employer. She has not reached minimum retirement age. Oscar was deployed to Qatar and entered a combat zone on April 20, 2019 and is scheduled to return to the U.S on April 15, 2020. Oscar has rental property, which he placed into service in 2016 Rental property: Oscar is an active participant. Single family residence, 3571 Oak Street, Your City, Your State. - Purchased property: 06/03/2009. Rented: 1/1/2019 - 12/31/2019. Annual rental income: $13,500. Insurance: $1,500. Management fees: $950. Oscar paid $625 to replace a broken doorbell, shower head, leaky faucet and unclog drains. He learned how to complete these repairs after watching Do-It- Yourself videos on the internet. He estimates his time for completing the repairs is worth $1,000, which is equivalent to professional electrician and plumber labor cot. Real estate property tax: $1,500. Mortgage Interest: $3,625. - Depreciation: $2,000. Oscar did not make any payments that would require him to file Form 1099. Oscar and Patricia did not itemize last year and do not have enough deductions to itemize this year