Comprehensive Problem 2-1

Beverly and Ken Hair have been married for 3 years. Beverly works as an accountant at Cypress Corporation. Ken is a full-time student at Southwest Missouri State University (SMSU) and also works part-time during the summer at Cypress Corp. Ken's birthdate is January 12, 1993 and Beverly's birthdate is November 4, 1995. Beverly and Ken each received a W-2 form from Cypress Corporation (see separate tab).

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

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, Beverly was laid off from her former job and was unemployed during January 2019. 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 that ended in divorce in 2014. During 2019, he paid his ex-wife $300 per month in child support. Robert is claimed as a dependent by Ken's ex-wife.

During 2019, Ken's aunt died. The aunt, in her will, left Ken $15,000 in cash. Ken deposited this money in the Boatman's Bank savings account.

Required: Complete the Hairs' Form 1040, Schedule 1, and the Qualified Dividends and Capital Gain Tax Worksheet. The Hair's had health cover for the entire year. They do not want to make any contribution to the presidential election campaign. Make any other 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.

1. 1	Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							1	53,700
   	2a	Tax-exempt interest . .	2a	1,000	b	Taxable interest. Attach Sch. B if required			2b	652
   Standard Deduction for Single or Married filing separately, $12,200 Married filing jointly or Qualifying widow(er), $24,400 Head of household, $18,350 If you checked any box under Standard Deduction, see instructions.	3a	Qualified dividends . . .	3a	300	b	Ordinary dividends. Attach Sch. B if required			3b	300
   	4a	IRA distributions . . . . .	4a		b	Taxable amount . . . . . . . . . .			4b
   	c	Pensions and annuities	4c		d	Taxable amount . . . . . . . . . .			4d
   	5a	Social security benefits	5a		b	Taxable amount . . . . . . . . . .			5b
   	6	Capital gain or (loss). Attach Schedule D if required. If not required, check here . . .							6
   	7a	Other income from Schedule 1, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							7a	1,825
   	b	Add lines 1, 2b, 3b, 4b, 4d, 5b, 6, and 7a. This is your total income . . . . . . . . . . . .							7b	56,477
   	8a	Adjustments to income from Schedule 1, line 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . .							8a
   	b	Subtract line 8a from line 7b. This is your adjusted gross income . . . . . . . . . . . . . .							8b	56,477
   	9	Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					9	24,400
   	10	Qualified business income deduction. Attach Form 8995 or Form 8995-A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					10
   	11a	Add lines 9 and 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							11a	24,400
   	b	Taxable income. Subtract line 11a from line 8b . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							11b	32,077

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

   Cat. No. 11320B

   Form 1040 (2019)

   Form 1040 (2019)

   Page 2

   	12a	Tax (see inst.) Check if any from Form(s): 1 8814 2 4972 3 . . . . . . . . . . . . . . . . . . .	12a
   	b	Add Schedule 2, line 3, and line 12a and enter the total . . . . . . . . . . . . . . . . . . . . . .			12b

Need help figuring out 12a and 12b. THANK YOU!

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