Richard McCarthy (born 2/14/1966; Social Security number 100-10-9090) and Christine McCarthy (born 6/1/1968; Social Security number 101-21-3434) have a 19-year-old son Jack, (born 10/2/2001; Social Security number 555-55-1212), who is a full-time student at the University of Key West. The McCarthys also have a 12-yearold daughter Justine, (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. The McCarthys did not receive an EIP in 2020. Richard is the CEO at a paper company. His 2020 Form W-2:

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 accrual basis and her bookkeeper provided the following information:

Christine came into contact with a client that had COVID and was unable to work for 14 days under orders of state health officials. Her employees were unaffected. She also elected to defer self-employment taxes (but not household taxes) under the COVID provisions. She allocates 77.5 percent of her income to the March 27 to December 31, 2020 COVID period.
The McCarthys have a nanny/housekeeper whom they paid $12,700 during 2020.
They did not withhold income or FICA taxes. The McCarthys paid Pennsylvania state unemployment tax of $378 in 2020.
Christine received a 2020 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.
The McCarthys received a Form 1099-G from Pennsylvania that reported a $477 state income tax refund from 2019. The McCarthys filed a Schedule A in 2019 and had $14,223 of state income tax expense that was limited to a $10,000 deduction.

The McCarthys paid the following in 2020:

Required:

Complete the McCarthys’ federal tax return for 2020. Use Form 1040, Schedule 1, Schedule 2, Schedule 3, Schedule A, Schedule B, Schedule C, Schedule H, Schedule SE, Form 7202, Form 8995, Form 8959, and Form 8960 to complete this tax return. Make realistic assumptions about any missing data and ignore any alternative minimum tax. Do not complete Form 4952, which is used for depreciation.

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a Employee's social security number 100-10-9090 b Employer identification number (N) 32-5656567 e Employer's name, address, and ZIP code Mufflin-Dunder Paper 302 Lackawanna Ave. Scranton, PA 18503 d Control number e Employee's first name and initial Richard McCarthy 32 Sleep Hollow Road Clarks Summit, PA 18411 f Employee's address and ZIP code 15 State Employer's state ID number PAL 1234824 Last name Form W-2 Wage and Tax Statement Copy B-To Be Filled With Employee's FEDERAL Tax Return. This Information is being furnished to the Internal Revenue Service. OMB No. 1545-0008 FAST! Use Safe, accurate, 1 Wages, tips, other compensation 230,800.00 3 Social security wagos 137,700.00 6 Modicare wages and tips 235,800.00 7 Social security tips 9 Suff. 11 Nonqualified plans 13 ory play 16 Stato wages, tips, ato. 17 Stata income tax 230,800.00 13,800.00 14 Other 2020 efile www.in.govlabile 2 Federal income tax withheld 55,800.00 4 Social security tax withhold 8,537.40 6 Modicaro tax withhold 3,741.30 8 Allocated tips F DET Third-party sick pa 10 Dependent care benefits 12a Sea instructions for bax 12 D 5,000.00 12b Visit the IRS website at 120 1 DD 10,328.12 12d 18 Local wages, tips, ato. 19 Local income tax 20 Locality name Department of the Trassury-Internal Revenue Service