CASE FACTS - Calculating Federal Tax - 2020.

Milly Manpower, age 45, is single and has no dependents. Her social security number is 987-65-4321. Milly lives at 3000 Westcliffe Drive, Cedar City, Utah 84720. She has no interest in contributing to any Presidential Election Campaign.

The following are her tax related items:

1. Milly has a full-time job as a senior administrative assistant at Lets Get To Work, Services, Inc. She earned a $60,000 salary from Lets Go To Work, Inc. They withheld federal income tax of $6,000 and state income tax of $4,000.

2. Milly received a year end performance bonus from Lets Go To Work, Inc. in the amount of $3,000.

3. $600 of interest income from Wells Fargo Bank.

4. $1,000 of interest income from Iron County Water District Bonds.

5. $1,200 of ordinary dividends (not qualified) from her stock portfolio.

6. Milly loaned her friend, Frank, $3,500 on July 1st two years ago. At the inception of the loan arrangement, Frank signed a promissory note. He has repaid $500 of the loan. On September 1st of the current year he declared bankruptcy. Frank told Milly that he will be unable to make any further payments on the loan. No Form 1099 was issued for the outstanding balance.

7. Millys aunt passed away and left her $300,000 cash which Milly immediately invested in the stock market.

8. For her birthday Millys grandmother gave her $2,000 in the form of a check.

9. While passing through McCarren airport in Las Vegas Milly spend $25.00 on the slots. She ended up winning $350.

10. Milly owns her own home. She received a 1098 from her bank showing that she paid $6,000 in interest expense and $4,500 in real property taxes.

11. Milly donated $2,000 to her local church and gave $100 to the American Heart Association.

12. Milly owns and operates Office Administration Services as a sole proprietor. Her business address is 555 Workhorse Dr., Cedar City, UT 84720. She is a cash basis taxpayer. She is a material participant in the business. She is not required to file any Forms 1099 for the business. Milly had the following income and expenses from the business:

a. Gross Receipts $18,000 b. Office expenses $1,000 c. Rents $8,000 d. Supplies $2,000 e. Payroll taxes $600 f. Utilities $4,000 g. Wages $6,000 h. Estimated Federal income tax payments $1,2001

13. If Milly receives a federal income tax refund she will deposit it into her Wells Fargo checking account. Her routing number is 89898989 and her account number is 887886885. She does not want to authorize any person to discuss her tax return with the IRS.

REQUIREMENTS

Step 1.

Prepare Tax Formula Spreadsheet:

Please prepare a Tax Formula Spreadsheet using the tax information provided above and consistent with the following format:

Gross income (List gross income items not broad income, but actual taxable items) - Deductions for AGI (list each above-the-line deduction, if any) = AGI - Deductions from AGI (Standard or Itemized (list each item) = Taxable Income

Tax (calculate the tax using the 2019 tax table found at IRS.gov) - Federal Income Tax withheld & Estimated Tax Payments = Amount Owed or Amount Overpaid