Bob and Melissa Grant are married and live in Kentucky.  The Grants have three children: Robert (age 21, college student), Jared (age 15), and Judy (age 5).  The Grants would like to file a joint tax return for the year.

 

The following information relates to the Grant's tax year:

 

• Bob's Social Security number is 987-45-1234
• Melissa's Social Security number is 494-37-4883
• Robert's Social Security number is 412-32-4690
• Jared's Social Security number is 412-32-5690
• Judy's Social Security number is 412-32-7690
• The Grants' mailing address is 95 Hickory Road, Frankfort, KY
• Robert, Jared, and Judy are tax dependents for federal tax purposes.

 

 

Bob Grant received the following during the year:

 

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
National Storage	$85,000	$20,000	$5,000
Lexington Little League	$8,000	0	0

 

 

 

 

Melissa Grant received the following during the year:

 

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
Jensen Photography	$20,000	$4,000	$2,000

 

All applicable and appropriate payroll taxes were withheld by Grants' respective employers.

 

 

Melissa has a small photography business.  She provided you with the following information for 2021:

 

Income:

Weddings and Receptions:  $20,000 in fees

Photo Restorations:  $3,000 in fees

Family Portraits:  $10,000 in fees

 

Expenses:

Photography Supplies:  $5,000

Mileage:  700 miles

Office Supplies:  $800

Props and Backgrounds:  $800

Advertising:  $500

Camera and Lenses:  $3,000

 

The Grants paid $8,000 to the University of Kentucky for Robert's tuition and fees in 2021.

 

The Grants sold 200 shares of ExxonMobil stock on July 1, 2021. Below is the information relating to the stock sale:

 

Purchase Date:  January 1, 2010

Purchase Price:  $20 per share

Selling Price:  $40 per share

Commissions and Fees:  $10 per share

 

 

The Grants also received the following during this year:

 

Interest Income from First Kentucky Bank                                        $3,000

Interest Income from City of Lexington, KY Bonds                         $3,000

Interest Income from U.S. Treasury Bonds                                       $6,000

Interest Income from Nevada State School Board Bonds                  $2,500

Workers' Compensation payments to Bob                                         $5,000

 

 

 

 

Disability payments received by Bob on account of injury                $8,000

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

 

Melissa received the following funds as a result of a lawsuit for damages sustained in a car 

accident:

• Medical Expenses                 $10,000
• Emotional Distress                $25,000
• Punitive Damages                 $60,000

                        

December 12, 2021 was the Grant's lucky day!  They won a raffle prize of a new 2022 Ford Mustang convertible valued at $55,000.  They paid 10% in Federal and 5% in state income taxes of the value of the car.

 

Bob received an inheritance from his favorite uncle, James Robert, in the amount of $75,000 in cash, on November 30, 2021.

 

The Grant's rent a garage apartment to Robert's best friend, Ricky, for $3,000 a month.  The total expenses for the year were $4,000, which consisted of utilities only.  In addition, depreciation for the year on the apartment is $5,000.

 

Bob paid his ex-wife $15,000 in alimony in 2021.  They divorced in 2015.

 

Ten years ago, Melissa purchased an annuity contract for $40,000. This year, she received her first payment on the annuity.  The payment amount was $6,000.  The annuity started to pay on January 1, and she received a full first year's payment.  It will pay her $6,000 per year for ten years (beginning with this year).  The $6,000 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 a grantor or beneficiary of a foreign trust during the tax year.

 

 

The Grants paid the following expenses during the year:

 

Dentist/Orthodontist (unreimbursed by insurance)                             $7,000

Doctors (unreimbursed by insurance)                                                 $1,300

Prescriptions (unreimbursed by insurance)                                         $  700

KY state tax payment made on 4/15/21 for 2020 tax liability            $1,800

Real property taxes on residence                                                        $9,000

Vehicle property tax based upon age of vehicle                                 $  500

Mortgage interest on principal residence                                          $13,500

Interest paid on borrowed money to purchase the City of

Lexington, KY municipal bonds                                            $2,000

 

 

Interest paid on borrowed money to purchase 

U.S. Treasury bonds                                                               $2,000

Contribution to the Red Cross                                                            $4,000

Contribution to Senator Rick Taylor's Re-election Campaign          $2,500

Contribution to First Church of Kentucky                                       $12,000

Fees paid to Jones & Company, CPAs for tax preparation                $2,000

 

In addition, Bob drove 6,000 miles commuting to work and Melissa drove 5,000 miles commuting to work in 2021.  Both the Grants have represented to you that they maintained careful logs to support their respective mileage.

 

The Grants drove 800 miles in total to receive medical treatment at hospitals and doctor offices in 2021. 

 

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