Comprehensive Problem 2-1

Bev and Ken Hair have been married for 3 years. Both taxpayers are under age 65. Ken is a full-time student at Southwest Missouri State University (SMSU) and Bev works as an accountant at Cypress Corporation. Ken's is 465-57-9934. Kens birthdate is January 12, 1991 and Bevs birthdate is November 4, 1993. Bev and Ken each received a W-2 form from Cypress Corporation.

The Hairs have interest income of $1,000 on City of St. Louis bonds. Bev and Ken received a Form 1099-INT from Boatman's Bank and a 1099-DIV form from green Corporation.

Ken is an excellent student at SMSU. He was given a $1,750 scholarship by the university to help pay educational expenses. The scholarship funds were used by Ken for tuition and books.

Last year, Bev was laid off from her former job and was unemployed during January 2017. She was paid $1,825 of unemployment compensation until she started work with her current employer, Cypress Corporation.

Ken has a 4-year-old son, Robert R. Hair, from a prior marriage. During 2017, he paid his ex-wife $300 per month in child support. Robert is claimed as a dependent by Ken's ex-wife.

During 2017, Ken's aunt died. The aunt, in her will, left Ken $15,000 in cash. Ken deposited this money in the Boatmans Bank savings account.

Required: Complete the Hair's Form 1040A and the Qualified Dividends and Capital Gain Tax Worksheet. Make realistic assumptions about any missing data. If an amount box does not require an entry or if an amount is zero, enter "0". Enter amounts as positive numbers. If required, round amounts to the nearest dollar.

Complete the Hair's Form 1040A.

Form 1040A

Department of the TreasuryInternal Revenue Service U.S. Individual Income Tax Return (99)

2017

IRS Use Only

Your first name and initial Ken	Last name Hair		OMB No. 1545-0074
			Your social security number 465-57-9934
If a joint return, spouse's first name and initial Bev	Last name Hair		Spouse's social security number 465-74-3321
Home address (number and street). If you have a P.O. box, see instructions. 3567 River Street		Apt. no.	Make sure the SSN(s) above and on line 6c are correct.
City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Springfield, MO 63126			Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse
Foreign country name	Foreign province/state/country	Foreign postal code

Filing status

Married filing jointly (even if only one had income)

Exemptions

6a

Yes Yourself.

If someone can claim you as a dependent, do notcheck box 6a.

}

Boxes checked on 6a and 6b

b

Yes Spouse

If more than six dependents, see instructions.

c

Dependents:

(2)Dependent's social security number

(3)Dependent's relationship to you

(4) If child under age 17 qualifying for child tax credit (see instructions)

No. of children on 6c who: lived with you

________

(1) First name

Last name

did not live with you due to divorce or separation (see instructions)

________

Dependents on 6c not entered above

________

Add numbers on lines above

d

Total number of exemptions claimed.

Income Attach Form(s) W-2 here. Also attach Form(s) 1099-R if tax was withheld. If you did not get a W-2, see instructions.	7	Wages, salaries, tips, etc. Attach Form(s) W-2.					7
	8a	Taxable interest. Attach Schedule B if required.					8a
	b	Tax-exempt interest. Do not include on line 8a.		8b
	9a	Ordinary dividends. Attach Schedule B if required.					9a
	b	Qualified dividends (see instructions).		9b
	10	Capital gain distributions (see instructions).					10
	11a	IRA distributions.	11a	11b	Taxable amount (see instructions).		11b
	12a	Pensions and annuities.	12a	12b	Taxable amount (see instructions).		12b
	13	Unemployment compensation and Alaska Permanent Fund dividends.					13
	14a	Social security benefits.	14a	14b	Taxable amount (see instructions).		14b
	15	Add lines 7 through 14b (far right column). This is your total income.					15
Adjusted gross income	16	Educator expenses (see instructions).		16
	17	IRA deduction (see instructions).		17
	18	Student loan interest deduction (see instructions).		18
	19	Reserved for future use.		19
	20	Add lines 16 through 19. These are your total adjustments.					20
	21	Subtract line 20 from line 15. This is your adjusted gross income.					21

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 11327A

Form 1040A (2017)

Form 1040A (2017)

Page 2

Tax, credits, and payments

22

Enter the amount from line 21 (adjusted gross income).

22

23a

Check if:

{

You were born before January 2, 1953, Blind. Spouse was born before January 2, 1953, Blind.

}

Total boxes checked 23a

Standard Deduction for

People who check any box on line 23a or 23b orwho can be claimed as a dependent, see instructions.

All others:

Single or Married filing separately, $6,350

Married filing jointly or Qualifying widow(er), $12,700

Head of household, $9,350

b

If you are married filing separately and your spouse itemizes deductions, check here

23b

24

Enter your standard deduction.

24

25

Subtract line 24 from line 22. If line 24 is more than line 22, enter -0-.

25

26

Exemptions. Multiply $4,050 by the number on line 6d.

26

27

Subtract line 26 from line 25. If line 26 is more than line 25, enter -0-. This is your taxable income.

27

28

Tax, including any alternative minimum tax (see instructions).

28

29

Excess advance premium tax credit repayment. Attach Form 8962.

29

30

Add lines 28 and 29.

30

31

Credit for child and dependent care expenses. Attach Form 2441.

31

32

Credit for the elderly or the disabled. Attach Schedule R.

32

33

Education credits from Form 8863, line 19.

33

34

Retirement savings contributions credit. Attach Form 8880.

34

35

Child tax credit. Attach Schedule 8812, if required.

35

36

Add lines 31 through 35. These are your total credits.

36

37

Subtract line 36 from line 30. If line 36 is more than line 30, enter -0-.

37

38

Health care: individual responsibility (see instructions).

Full-year coverage

38

39

Add line 37 and line 38. This is your total tax.

39

40

Federal income tax withheld from Forms W-2 and 1099.

40

If you have a qualifying child, attach Schedule EIC.

41

2017 estimated tax payments and amount applied from 2016 return.

41

42a

Earned income credit (EIC).

42a

b

Nontaxable combat pay election.

42b

43

Additional child tax credit. Attach Schedule 8812.

43

44

American opportunity credit from Form 8863, line 8.

44

45

Net premium tax credit. Attach Form 8962.

45

46

Add lines 40, 41, 42a, 43, 44, and 45. These are your total payments.

46

Refund Direct deposit? See instructions and fill in 48b, 48c, and 48d or Form 8888.

47

If line 46 is more than line 39, subtract line 39 from line 46. This is the amount you overpaid.

47

48a

Amount of line 47 you want refunded to you. If Form 8888 is attached, check here

48a

b

Routing Number

c Type: Checking Savings

d

Account Number

49

Amount of line 47 you want applied to your 2018 estimated tax.

49

Amount you owe

50

Amount you owe. Subtract line 46 from line 39. For details on how to pay, see instructions.

50

51

Estimated tax penalty (see instructions).

51

Third party designee

Do you want to allow another person to discuss this return with the IRS (see instructions)? Yes. Complete the following. No

Designee's name

Phone no.

Personal identification number (PIN)

Sign here Joint return? See instructions. Keep a copy for your records.

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year. Declaration of preparer (other than the taxpayer) is based on all information of which the preparer has any knowledge.

Your signature Ken Hair

Date

Your occupation

Daytime phone number

Spouse's signature. If a joint return, both must sign. Bev Hair

Date

Spouse's occupation

If the IRS sent you an Identity Protection PIN, enter it here
(see inst.)

Paid preparer use only		Print/Type preparer's name	Preparer's signature	Date	Check if self employed	PTIN
		Firm's name			Firm's EIN
		Firm's address			Phone no.
Go to www.irs.gov/Form1040A for instructions and the latest information.				Form 1040A (2017)

Complete the Hair's Qualified Dividends and Capital Gain Tax Worksheet.

Qualified Dividends and Capital Gain Tax WorksheetLine 28

Keep for Your Records

*

Before you begin:

Be sure you do not have to file Form 1040 (see the Instructions for Form 1040A, line 10).

	1.	Enter the amount from Form 1040A, line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					1.
	2.	Enter the amount from Form 1040A, line 9b . . . . . . . . . . . . . . . . . . . .			2.
	3.	Enter the amount from Form 1040A, line 10 . . . . . . . . . . . . . . . . . . . .			3.
	4.	Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					4.
	5.	Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					5.
	6.	Enter the smaller of:
			The amount on line 1, or		}
			$37,950 if single or married filing separately,			. . . . . . .	6.
				$75,900 if married filing jointly or qualifying widow(er), or
				$50,800 if head of household.
	7.	Enter the smaller of line 5 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					7.
	8.	Subtract line 7 from line 6. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . . . .					8.
	9.	Enter the smaller of line 1 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					9.
	10.	Enter the amount from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					10.
	11.	Subtract line 10 from line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					11.
	12.	Multiply line 11 by 15%(.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							12.
	13.	Use the Tax Table to figure the tax on the amount on line 5. Enter the tax here . . . . . . . . . . . . . . . . . . . . . .							13.
	14.	Add lines 12 and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							14.
	15.	Use the Tax Table to figure the tax on the amount on line 1. Enter the tax here . . . . . . . . . . . . . . . . . . . . . . . .							15.
	16.	Tax on all taxable income. Enter the smaller of line 14 or line 15 here and on Form 1040A, line 28. . . . . . . . . .							16.

* Note: This worksheet does not apply for high-income taxpayers under the ACA or ATRA provisions (See LO 1.9).