Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

(3 OMB No. 1545-0074 SCHEDULE 1 Additional Income and Adjustments to Income (Form 1040) Attach to Form 1040. 2018 Attachment Sequence No. 01 Department of

image text in transcribed

image text in transcribedimage text in transcribed
(3 OMB No. 1545-0074 SCHEDULE 1 Additional Income and Adjustments to Income (Form 1040) Attach to Form 1040. 2018 Attachment Sequence No. 01 Department of the Treasury Go to www.irs.gov/Form1040 for instructions and the latest information. Internal Revenue Service Your social security number Name(s) shown on Form 1040 1-9b Additional 1-9b Reserved . . . . . . 10 Income 10 Taxable refunds, credits, or offsets of state and local income taxes 11 11 Alimony received Business income or (loss). Attach Schedule C or C-EZ 12 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here 13 14 14 Other gains or (losses). Attach Form 4797 15b 15a Reserved 16a Reserved 16b 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17 Farm income or (loss). Attach Schedule F 18 19 Unemployment compensation 19 20a Reserved 20b 21 Other income. List type and amount 21 22 Combine the amounts in the far right column. If you don't have any adjustments to income, enter here and include on Form 1040, line 6. Otherwise, go to line 23 22 0 Adjustments 23 Educator expenses 23 to Income 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 24 25 Health savings account deduction. Attach Form 8889 25 26 Moving expenses for members of the Armed Forces. Attach Form 3903 26 0 27 Deductible part of self-employment tax. Attach Schedule SE 27 28 Self-employed SEP, SIMPLE, and qualified plans 28 29 Self-employed health insurance deduction 29 30 Penalty on early withdrawal of savings 30 31a Alimony paid b Recipient's SSN 0 31a 32 IRA deduction 33 Student loan interest deduction 32 0 33 34 Reserved 34 35 Reserved Add lines 23 through 35 35 36 KIA For Paperwork Reduction Act Notice, see your tax return instructions. 36 0 Schedule 1 (Form 1040) 2018COMPREHENSIVE PROBLEM 1:7-62 Dan and Cheryl are married, file a joint return, and have no children. Dan, age 45, is an independent contractor working in pharmaceutical sales and Cheryl, age 42, is a nurse at a local hospital. Dan's SSN is 400-20-1000 and Cheryl's SSN is 200-40-8000 and they reside at 2033 Palmetto Drive, Atlanta, GA 30304. Dan is paid according to commissions from sales, and he has no income tax or payroll tax withholdings. Dan operates his busi- ness from his home office. During 2018, Dan earned total commissions in his business of $125,000. Cheryl earned a salary during 2018 of $45,400, with the following withhold- ings: $6,000 federal taxes, $1,800 state taxes, $2,815 OASDI, and $658 Medicare taxes. During 2018, Dan and Cheryl had interest income from corporate bonds and bank ac- counts of $1,450 and qualified dividends from stocks of $5,950. Dan also actively trades stocks and had the following results for 2018: LTCG $4,900 LTCL (3,200) STCG 0 STCL (7,800) He had no capital loss carryovers from previous years. Dan does a considerable amount of travel in connection with his business and uses his own car. During 2018, Dan drove his car a total of 38,000 miles, of which 32,000 were business related. He also had business-related parking fees and tolls during the year of $280. Dan uses the mileage method for deducting auto expenses. Dan also had the follow- ing travel expenses while away from home during the year: Hotel $4,200 Meals 820 Entertainment of customers 1,080 Tips 100 Laundry and cleaning 150 Total $6,350 Dan uses the simplified method to deduct expenses for his office-in-home. His office measures 15 feet by 12 feet in size. Cheryl incurred several expenses in connection with her nursing job. She paid $450 in professional dues, $200 in professional journals, and $350 for uniforms. Dan and Cheryl had the following other expenditures during the year: Health insurance premiums (after-tax) $ 4,400 Doctor bills 470 Real estate taxes on home 6,800 Personal property taxes 1,400 Mortgage interest-all deductible 7,400 Charitable contributions-cash 9,000 Charitable contributions-GE stock owned for 5 years: FMV $8,000 Adjusted basis 2,000 Tax preparation fees 750 During 2018, Dan and Cheryl paid federal and state estimated tax payments on a quarterly basis. Federal payments for the year amounted to $24,000. State estimated pay- ments for the year amounted to $2,200. Compute Dan and Cheryl's income tax liability for 2018. Disregard the alternative minimum tax

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting A Focus on Ethical Decision Making

Authors: Steve Jackson, Roby Sawyers, Greg Jenkins

5th edition

324663854, 978-0324663853

Students also viewed these Accounting questions

Question

What is the difference between risk aversion and loss aversion?

Answered: 1 week ago