Bob and Jill, a married couple, need to file their 2021 taxes. Their income and expense information for the tax year follows: - They wish to use the "Married Filing Jointly" filing status. - They have one child, Sandy, who is 14 years old and lives with them at home. - They pay 3,000 a year for after school care for Dave (hint -Form 2441 and Schedule 3) - Their relevant W-2 information follows: 103,000 of combined federal taxable income They had 10,580 of federal taxes withheld They paid (had withheld) 2,900 of state taxes They paid (had withheld) 2,200 of local taxes - They rent their home and pay no mortgage interest - They paid 2,000 of student loan interest in 2019 - Jill has a side business named "Jill's Fabulous Cupcakes" in which she earned 5,000 in income and incurred 800 dollars of expenses in 2019 (hint - schedules C and SE). 4c SCHEDULE SE OMB No. 1545-0074 (Form 1040) Self-Employment Tax 2021 Department of the Treasury Go to www.irs.gov/ScheduleSE for instructions and the latest information Attachment Internal Revenue Service 99 Attach to Form 1040, 1040-SR, or 1040-NR. Sequence No. 17 Name of person with self-employment income (as shown on Form 1040, 1040-SR, or 1040-NR) Social security number of person with self-employment income Parti Self-Employment Tax Note: If your only income subject to self-employment tax is church employee income, see instructions for how to report your income and the definition of church employee income. If you are a minister, member of a religious order, or Christian Science practitioner and you filled Form 4361, but you had $400 or more of other net earnings from self-employment, check here and continue with Part I Skip lines 1a and 1b if you use the farm optional method in Part II. See instructions. 1a Net farm profit or loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A 1a b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code AH 1bK Skip line 2 if you use the nonfarm optional method in Part II. See instructions. 2 Net profit or loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). See instructions for other income to report or if you are a minister or member of a religious order 2 3 Combine lines 1a, 1b, and 2. 3 4a If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3 4a Note: If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here. 4b c Combine lines 4a and 4b. If less than $400, stop; you don't owe self-employment tax. Exception: If less than $400 and you had church employee income, enter -- and continue. Sa Enter your church employee income from Form W-2. See instructions for definition of church employee income 5a b Multiply line 5a by 92.35% (0.9235). If less than $100, enter - - 5b 6 Add lines 4c and 5b 6 7 Maximum amount of combined wages and self-employment earnings subject to social security tax or the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2021 7 142.800 8a Total social security wages and tips (total of boxes 3 and 7 on Form(s) W-2) and railroad retirement (tier 1) compensation. If $142,800 or more, skip lines 8b through 10, and go to line 11 8a b Unreported tips subject to social security tax from Form 4137, line 10 8b c Wages subject to social security tax from Form 8919, line 10 8c d Add lines 8a, 8b, and 8c .. 8d 9 Subtract line 8d from line 7. If zero or less, enter-O- here and on line 10 and go to line 11 9 10 Multiply the smaller of line 6 or line 9 by 12.4% (0.124). 10 11 Multiply line 6 by 2.9% (0.029) ... 12 Self-employment tax. Add lines 10 and 11. Enter here and on Schedule 2 (Form 1040), line 4 12 13 Deduction for one-half of self-employment tax. Multiply line 12 by 50% (0.50). Enter here and on Schedule 1 (Form 1040), line 15 13 Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income' wasn't more than $8,820, or (b) your net farm profits were less than $6,367. 14 Maximum income for optional methods. 14 5,880 15 Enter the smaller of: two-thirds F/s) of gross farm income' (not less than zero) or $5,880. Also, include this amount on line 4b above 15 Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits were less than $6,367 and also less than 72.189% of your gross nonfarm income, and (b) you had net earnings from self-employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times. 16 Subtract line 15 from line 14. 16 17 Enter the smaller of two-thirds F/) of gross nonfarm income (not less than zero) or the amount on line 16. Also, include this amount on line 4b above 17 From Sch. F, line 9, and Sch. K-1 (Form 1065), box 14, cade B. From Sch. C, line 31; and Sch. K-1 (Form 1065). box 14. code A. * From Sch. F, line 34; and Sch. K-1 (Form 1065), box 14. code A-minus the amount From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, cade C. you would have entered on line 1b had you not used the optional method. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 113582 Schedule SE (Form 1040) 2021 11 SCHEDULEC Profit or Loss From Business OMB No. 1545-0074 (Form 1040) (Sole Proprietorship) 2021 Department of the Treasury Go to www.irs.gov/ScheduleC for instructions and the latest information. Attachment Internal Revenue Service Attach to Form 1040, 1040-SR, 1040-NR, or 1041; partnerships must generally file Form 1065. Sequence No. 09 Name of proprietor Social security number (SSN) OD 1 2 9 A Principal business or profession, including product or service (see instructions) B Enter code from instructions Business name. If no separate business name, leave blank. D Employer ID number (EIN) se instr.) E Business address (including suite or room no.) City, town or post office, state, and ZIP code F Accounting method: (1) Cash (2) Accrual (3) Other (specify) G Did you "materially participate in the operation of this business during 2021? If "No," see instructions for limit on losses Yes No H If you started or acquired this business during 2021, check here 1 Did you make any payments in 2021 that would require you to file Formis) 1099? See instructions Yes No J If "Yes," did you or will you file required Formis) 1099? . Yes No Part 1 Income 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was checked 2 Retums and allowances. 3 Subtract line 2 from line 1 3 4 Cost of goods sold (from line 42) 4 5 Gross profit. Subtract line 4 from line 3 5 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 6 7 Gross income. Add lines 5 and 6 7 Part II Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising 8 18 Office expense (see instructions). 18 9 Car and truck expenses (see 19 Pension and profit-sharing plans. 19 instructions) 20 Rent or lease see instructions: 10 Commissions and fees 10 a Vehicles, machinery, and equipment 20a 11 Contract labor (see instructions) 11 b Other business property 20b 12 Depletion. 12 21 Repairs and maintenance 21 13 Depreciation and section 179 22 Supplies (not included in Part III 22 expense deduction (not included in Part III) (see 23 Taxes and licenses. 23 instructions) 13 24 Travel and meals: 14 Employee benefit programs a Travel. 24a (other than on line 19) 14 b Deductible meals (see 15 Insurance (other than health) 15 instructions) 24b 16 Interest (see instructions): 25 Utilities 25 a Mortgage paid to banks, etc.) 16a 26 Wages (less employment credits) 26 b Other 27a Other expenses (from line 48) 27a 17 Legal and professional services 17 b Reserved for future use 27b 28 Total expenses before expenses for business use of home. Add lines 8 through 27a 29 Tentative profit or loss). Subtract line 28 from line 7. 29 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method. See instructions. Simplified method filers only: Enter the total square footage of (a) your home: and (b) the part of your home used for business: Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30 30 31 Net profit or loss). Subtract line 30 from line 29. If a profit, enter on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2. If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. 31 If a loss, you must go to line 32. 32 If you have a loss, check the box that describes your investment in this activity. See instructions. If you checked 32a, enter the loss on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions.) Estates and trusts, enter on 32a All investment is at risk. Form 1041, line 3. 32b Some investment is not If you checked 32b, you must attach Form 6198. Your loss may be limited. at risk. For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040) 2021 16b 28 Page 2 Schedule C (Form 1040) 2021 Part III Cost of Goods Sold (See instructions) 33 34 Yes No Method(s) used to value closing inventory: Cost Lower of cost or market Other (attach explanation) Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation. Inventory at beginning of year. If different from last year's closing inventory, attach explanation 35 Purchases less cost of items withdrawn for personal use 36 35 36 37 Cost of labor. Do not include any amounts paid to yourself. 37 38 Materials and supplies 38 39 Other costs 39 40 Add lines 35 through 39 40 41 Inventory at end of year 41 42 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562. 43 When did you place your vehicle in service for business purposes? (month/day/year) of the total number of miles you drove your vehicle during 2021, enter the number of miles you used your vehicle for: 44 a Business b Commuting (see instructions) c Other 45 Yes No 46 Yes No Was your vehicle available for personal use during off-duty hours? Do you for your spouse) have another vehicle available for personal use? 47a Do you have evidence to support your deduction? "Yes," is the evidence written? Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. Yes O No Yes No 48 Total other expenses. Enter here and on line 27a 48 Schedule C (Form 1040) 2021 Bob and Jill, a married couple, need to file their 2021 taxes. Their income and expense information for the tax year follows: - They wish to use the "Married Filing Jointly" filing status. - They have one child, Sandy, who is 14 years old and lives with them at home. - They pay 3,000 a year for after school care for Dave (hint -Form 2441 and Schedule 3) - Their relevant W-2 information follows: 103,000 of combined federal taxable income They had 10,580 of federal taxes withheld They paid (had withheld) 2,900 of state taxes They paid (had withheld) 2,200 of local taxes - They rent their home and pay no mortgage interest - They paid 2,000 of student loan interest in 2019 - Jill has a side business named "Jill's Fabulous Cupcakes" in which she earned 5,000 in income and incurred 800 dollars of expenses in 2019 (hint - schedules C and SE). 4c SCHEDULE SE OMB No. 1545-0074 (Form 1040) Self-Employment Tax 2021 Department of the Treasury Go to www.irs.gov/ScheduleSE for instructions and the latest information Attachment Internal Revenue Service 99 Attach to Form 1040, 1040-SR, or 1040-NR. Sequence No. 17 Name of person with self-employment income (as shown on Form 1040, 1040-SR, or 1040-NR) Social security number of person with self-employment income Parti Self-Employment Tax Note: If your only income subject to self-employment tax is church employee income, see instructions for how to report your income and the definition of church employee income. If you are a minister, member of a religious order, or Christian Science practitioner and you filled Form 4361, but you had $400 or more of other net earnings from self-employment, check here and continue with Part I Skip lines 1a and 1b if you use the farm optional method in Part II. See instructions. 1a Net farm profit or loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A 1a b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code AH 1bK Skip line 2 if you use the nonfarm optional method in Part II. See instructions. 2 Net profit or loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). See instructions for other income to report or if you are a minister or member of a religious order 2 3 Combine lines 1a, 1b, and 2. 3 4a If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3 4a Note: If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here. 4b c Combine lines 4a and 4b. If less than $400, stop; you don't owe self-employment tax. Exception: If less than $400 and you had church employee income, enter -- and continue. Sa Enter your church employee income from Form W-2. See instructions for definition of church employee income 5a b Multiply line 5a by 92.35% (0.9235). If less than $100, enter - - 5b 6 Add lines 4c and 5b 6 7 Maximum amount of combined wages and self-employment earnings subject to social security tax or the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2021 7 142.800 8a Total social security wages and tips (total of boxes 3 and 7 on Form(s) W-2) and railroad retirement (tier 1) compensation. If $142,800 or more, skip lines 8b through 10, and go to line 11 8a b Unreported tips subject to social security tax from Form 4137, line 10 8b c Wages subject to social security tax from Form 8919, line 10 8c d Add lines 8a, 8b, and 8c .. 8d 9 Subtract line 8d from line 7. If zero or less, enter-O- here and on line 10 and go to line 11 9 10 Multiply the smaller of line 6 or line 9 by 12.4% (0.124). 10 11 Multiply line 6 by 2.9% (0.029) ... 12 Self-employment tax. Add lines 10 and 11. Enter here and on Schedule 2 (Form 1040), line 4 12 13 Deduction for one-half of self-employment tax. Multiply line 12 by 50% (0.50). Enter here and on Schedule 1 (Form 1040), line 15 13 Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income' wasn't more than $8,820, or (b) your net farm profits were less than $6,367. 14 Maximum income for optional methods. 14 5,880 15 Enter the smaller of: two-thirds F/s) of gross farm income' (not less than zero) or $5,880. Also, include this amount on line 4b above 15 Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits were less than $6,367 and also less than 72.189% of your gross nonfarm income, and (b) you had net earnings from self-employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times. 16 Subtract line 15 from line 14. 16 17 Enter the smaller of two-thirds F/) of gross nonfarm income (not less than zero) or the amount on line 16. Also, include this amount on line 4b above 17 From Sch. F, line 9, and Sch. K-1 (Form 1065), box 14, cade B. From Sch. C, line 31; and Sch. K-1 (Form 1065). box 14. code A. * From Sch. F, line 34; and Sch. K-1 (Form 1065), box 14. code A-minus the amount From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, cade C. you would have entered on line 1b had you not used the optional method. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 113582 Schedule SE (Form 1040) 2021 11 SCHEDULEC Profit or Loss From Business OMB No. 1545-0074 (Form 1040) (Sole Proprietorship) 2021 Department of the Treasury Go to www.irs.gov/ScheduleC for instructions and the latest information. Attachment Internal Revenue Service Attach to Form 1040, 1040-SR, 1040-NR, or 1041; partnerships must generally file Form 1065. Sequence No. 09 Name of proprietor Social security number (SSN) OD 1 2 9 A Principal business or profession, including product or service (see instructions) B Enter code from instructions Business name. If no separate business name, leave blank. D Employer ID number (EIN) se instr.) E Business address (including suite or room no.) City, town or post office, state, and ZIP code F Accounting method: (1) Cash (2) Accrual (3) Other (specify) G Did you "materially participate in the operation of this business during 2021? If "No," see instructions for limit on losses Yes No H If you started or acquired this business during 2021, check here 1 Did you make any payments in 2021 that would require you to file Formis) 1099? See instructions Yes No J If "Yes," did you or will you file required Formis) 1099? . Yes No Part 1 Income 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was checked 2 Retums and allowances. 3 Subtract line 2 from line 1 3 4 Cost of goods sold (from line 42) 4 5 Gross profit. Subtract line 4 from line 3 5 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 6 7 Gross income. Add lines 5 and 6 7 Part II Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising 8 18 Office expense (see instructions). 18 9 Car and truck expenses (see 19 Pension and profit-sharing plans. 19 instructions) 20 Rent or lease see instructions: 10 Commissions and fees 10 a Vehicles, machinery, and equipment 20a 11 Contract labor (see instructions) 11 b Other business property 20b 12 Depletion. 12 21 Repairs and maintenance 21 13 Depreciation and section 179 22 Supplies (not included in Part III 22 expense deduction (not included in Part III) (see 23 Taxes and licenses. 23 instructions) 13 24 Travel and meals: 14 Employee benefit programs a Travel. 24a (other than on line 19) 14 b Deductible meals (see 15 Insurance (other than health) 15 instructions) 24b 16 Interest (see instructions): 25 Utilities 25 a Mortgage paid to banks, etc.) 16a 26 Wages (less employment credits) 26 b Other 27a Other expenses (from line 48) 27a 17 Legal and professional services 17 b Reserved for future use 27b 28 Total expenses before expenses for business use of home. Add lines 8 through 27a 29 Tentative profit or loss). Subtract line 28 from line 7. 29 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method. See instructions. Simplified method filers only: Enter the total square footage of (a) your home: and (b) the part of your home used for business: Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30 30 31 Net profit or loss). Subtract line 30 from line 29. If a profit, enter on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2. If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. 31 If a loss, you must go to line 32. 32 If you have a loss, check the box that describes your investment in this activity. See instructions. If you checked 32a, enter the loss on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions.) Estates and trusts, enter on 32a All investment is at risk. Form 1041, line 3. 32b Some investment is not If you checked 32b, you must attach Form 6198. Your loss may be limited. at risk. For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040) 2021 16b 28 Page 2 Schedule C (Form 1040) 2021 Part III Cost of Goods Sold (See instructions) 33 34 Yes No Method(s) used to value closing inventory: Cost Lower of cost or market Other (attach explanation) Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation. Inventory at beginning of year. If different from last year's closing inventory, attach explanation 35 Purchases less cost of items withdrawn for personal use 36 35 36 37 Cost of labor. Do not include any amounts paid to yourself. 37 38 Materials and supplies 38 39 Other costs 39 40 Add lines 35 through 39 40 41 Inventory at end of year 41 42 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562. 43 When did you place your vehicle in service for business purposes? (month/day/year) of the total number of miles you drove your vehicle during 2021, enter the number of miles you used your vehicle for: 44 a Business b Commuting (see instructions) c Other 45 Yes No 46 Yes No Was your vehicle available for personal use during off-duty hours? Do you for your spouse) have another vehicle available for personal use? 47a Do you have evidence to support your deduction? "Yes," is the evidence written? Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. Yes O No Yes No 48 Total other expenses. Enter here and on line 27a 48 Schedule C (Form 1040) 2021