Coastline College

Acct C103, Individual Taxation

Spring 2020

Tax Year 2019 Form 1040 Tax Return Project

Based upon Bill and Susan Minor's information below, complete a Form 1040 for Tax Year 2019 using tax preparation software.You will receive 10 points for each correct figure you list on Lines 1, 2b, 6, 7, 8, 10, 15, 16, 20a, and 22.

-In 2019, Bill and Susan Minor had W-2 Wages totaling $95,000, Federal Tax Withheld of $9,000, and State Tax Withheld of $3,500.

-In 2019, Bill and Susan both had health insurance for the entire year through their employers which met the Minimum Essential Coverage requirements under the Affordable Care Act.

-Bill is an auditor at a hotel and Susan is a high school business teacher.

-Bill and Susan will file a Married Filing Joint Tax Return in 2019.

-In 2019, Bill received interest income of $250 from his 1^st Bank of the Third Best Account.He also cashed in a Certificate of Deposit early and the 6^th Federal Savings and Loan Bank assessed a $25 penalty for early withdrawal of savings.Bill received a Form 1099-INT which reported $75 in interest income from 6^th Federal Savings and Loan Bank in 2019.

-In 2019, Susan performed Jury Duty.She was paid $80 for her Jury Duty and turned over the check to her W-2 Employer, Mission Place High School.Susan received her full pay from Mission Place High School while she was on Jury Duty.

-In 2019, Bill and Susan spent $3,900 making repairs on their home.The repairs included work on their garage door, replacement of the kitchen flooring, and refurbishing their electrical breaker box.

-The Minor's reported itemized deductions on their Form 1040 Tax Return in 2018 and deducted in full all state income taxes they paid in 2018.They don't know if they can take the Standard Deduction or not in 2019.They want to take the largest deduction they can in 2019, whether that be the Standard Deduction OR the Itemized Deduction.

-In 2018, Susan received a $16,000 inheritance from the estate of her great-great-grandmother.

-Susan and Bill are both 50 years old and neither one is blind or disabled.

-Their grown children are Porsche and Carmen.The kids are out of the house and have their own jobs and apartments.Porsche, who made $96,000 in 2019, is a poor money manager and Bill gave her $3,800 in 2019.

-In 2019, Susan sent her Mom $1,700 to help her Mom buy medication and medical devices.Susan does not and cannot claim her Mom as a Dependency Exemption.

-The Minor's took fencing lessons in 2019 that cost $2,400.They said these lessons help them "unwind" after a busy workday. Susan liked fencing so much she bought a foil, epee, and saber costing $4,200.A day after buying the fencing equipment, a thief broke into Susan's fencing locker at the fencing center and stole the foil and saber worth $1,850.Susan filed a police report, had no insurance on the foil and saber, and the property was not recovered.

-In 2019, Susan paid $955 in union dues to the El Camino Real Teachers, Educators, and Mentors Union.

-Bill owed the IRS $4,600 from his 2017 Federal Income Tax Return.He is paying $212 a month on this debt.In 2019, Bill calculated he paid $2,644 in federal income tax and $370 in interest to the IRS.

-Susan helped her friend start a business.The friend plans on paying Susan $4,950 for all the work

she did.This payment will be made in December 2020.

-Susan decided in 2019 to become a self-employed tutor.She taught 2 kids business planning and

was paid $275.Her ONLY business expenses as a self-employed tutor were $50 for business cards and $250 for paper, pencils, and supplies.Susan also tells you she paid "Mystic Maria the World's 7^th Best and Inexpensive Fortune Teller" $540 to predict Susan's success.Maria reported that Susan would be wildly successful in her tutoring business and would gross approximately $475 in 2020.

-In 2019, Bill and Susan owned a rental property and calculated Total Rental Real Estate Income on Line 26, Schedule E, of $7,000.

-In 2019, Bill won a $975 cash prize for a contest he entered.Bill said he did NOT get a W-2 or a Form 1099 for the $975 he won.

-The Minor's received a State Tax Refund of $750 in April 2019 from the State of California.This refund was for Tax Year 2018.

-Bill stated he contributed $4,000 to his Roth IRA in 2019.

-Bill and Susan are members of their local Elks Lodge, which is a non-profit organization, involved in charitable work, and a Qualifying Charitable Organization.The Minor's pay $140 a year for dues and their only activity with the Elks is going to eat Sunday breakfast, attending dances, and buying drinks at the bar.

-The Minor's paid $9,950 in Home Mortgage Interest in 2019.They paid a property tax bill of $3,300 in 2019.

-In 2019, Bill drove his personal auto 5,200 miles as a volunteer meal deliverer for Let's Feed All of the Hungry, a Qualifying Charitable Organization.

-In 2019, Bill donated 150 hours of time to Goodwill, a Qualifying Charitable Organization.He figures his time is worth $40 an hour.

-Susan has AB- blood type.When the Red Cross Bloodmobile stops by her work, Susan donated blood.In 2019, she donated 6 pints of blood.The local hospital charges $300 a pint for patients who receive AB- Blood.

-In 2019, Bill incurred $2,800 in gambling losses at Lost Wages Casino.In 2019, he won $5,100 in the California Super Big Lotto.

-Bill and Susan calculated they had 6,000 commuting miles to their W-2 jobs in 2019.

-The Minor's donated $2,400 to Let's Feed the Whales and Save the Children Fund in 2019.Bill's friend Dante said the fund was is a scam.Bill went on the IRS Website and found that the fund was a Qualifying Charitable Organization.

- In 2019, Susan sold stock she had in The Coffee Grind Company.Susan's friend, Alma Cabrera, an Enrolled Agent, and calculated that Susan had a Short-Term Capital Gain of $6,200 from the sale of the stock.

-In 2019, Susan decided to run for the city council.She paid a $355 filing fee and borrowed $15,000 from the local bank to finance her campaign.Susan lost the election.

-In 2019, Bill and Susan paid homeowner's association dues of $1,700 on their personal residence.

-In 2019, Bill paid a dental bill of $7,800 for removal of 16 of his bad teeth and the filling of 16 of his other teeth.

In 2019, Bill paid $590 for DMV registration fees for his 2002 Chevy S-10 Pickup Truck and Susan's 2007 Yaris.Bill has determined these DMV fees are deductible on a Schedule A.

In 2019, Bill owned 100 shares in Iowa Furniture Corporation (IFC).On September 30, 2019, IFC paid dividends of $6 a share.Bill is enrolled in a Dividend Reinvestment Plan (DRIP) with IFC and when dividends were paid, Bill did not receive a check, instead, his dividends were re-invested and additional shares were purchased for Bill.

In 2019, Susan provided the local police with information that led to the arrest and conviction of a person that damaged cars in her neighborhood.She received a Certificate of Appreciation and a $150 reward from the city.

In 2019, Susan's sister, who is a well-known, successful, and highly paid entertainer, gave Susan a Tesla Model SKG Automobile with a Fair Market Value of $78,000.Susan uses the car to commute to her job and paid $900 in DMV registration fees that she has determined are deductible on a Schedule A.

In 2019, Bill was ticketed for driving his car without a valid registration and no proof of insurance.He paid a fine of $600, which included court costs.

-In 2019, Susan found a gold and diamond ring near hear house.She turned it into the police department and after 30 days, the police gave the property back to Susan since no one claimed it.In November 2019, Susan had the ring appraised and found out the fair market value of this found property was $8,200.

-In 2019, Bill received a set of golf clubs from his brother-in-law Mario.Bill was very happy to receive the clubs and played golf with Mario once a week in 2019.Bill checked with a golf store and was told the clubs he received were worth $950.

-In 2019, Susan paid a researcher $800 to trace her family history.The researcher reported to Susan she may be the rightful owner of a small farm in Germany worth $1,000,000.Susan has made plans to see if she owns the land, she has set aside $2,500 in a savings account for a title and legal search, and she will hire an attorney in December 2020 to determine her ownership rights.