Comprehensive Problem 2-2B

Carl Conch and Mary Duval are married and file a joint return. Carl works for the Key Lime Pie Company and Mary is a unemployed after losing her job in 2019. Carl's birthdate is June 14, 1975 and Mary's is October 2, 1975. Carl received a W-2 from his employer (see separate tab).

Carl and Mary received Form 1099-INT from the Coral Reef Bank and Form 1099-DIV from Southwest Corporation (see separate tab).

Mary is divorced and she pays her ex-husband (Tom Tortuga) child support. Pursuant to their January 12, 2017 divorce decree, Mary pays Tom $500 per month in child support. All payments were made on time in 2020.

In June of 2020, Mary's father gave her a cash gift of $75,000. Mary also received unemployment compensation as shown on the Form 1099-G (see separate tab).

Mary won a $800 prize in a women's club raffle in 2020. No income tax was withheld from the prize.

The Key Lime Pie Company provides Carl with a company car to drive while he is working. The Company spent $6,475 to maintain this vehicle during 2020. Carl never uses the car for personal purposes. The Key Lime Pie Company also provides a cafeteria for all employees on the factory premises. Other restaurants exist in the area and so Carl is not required to eat in the cafeteria, but he typically does. The value of Carl's meals is $650 in 2020.

Carl and Mary received a $2,400 EIP in 2020.

Required:

Complete Carl and Mary's Form 1040 and Schedule 1 for 2020. The taxpayers had health care coverage the entire year. Only Carl wants to make a 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 the amount is zero, enter "0". Enter all amounts as positive numbers. If required, round amounts to the nearest dollar.

Carl's W-2 Form Carl's earnings are reported on the following Form W-2: OMB No. 1545-0008 Safe, accurate, FAST! Use IRS e - file Visit the IRS website at www.irs.gov/efile a Employee's social security number 835-21-5423 b Employer identification number (EIN) 61-7654321 C Employer's name, address, and ZIP code Key Lime Pie Company 223 Key Deer Blvd. Big Pine Key, FL 33043 1 Wages, tips, other compensation 67,894.88 3 Social security wages 67,894.88 5 Medicare wages and tips 67,894.88 7 Social security tips 2 Federal income tax withheld 6,232.00 4 Social security tax withheld 4,209.48 Medicare tax withheld 984.48 8 Allocated tips 6 d Control number 10 Dependent care benefits 12a See instructions for box 12 c e Employee's first name and initial Last name Suff. 11 Nonqualified plans Carl Conch 1234 Mallory Square, Apt. #64 Key West, FL 33040 O 240.00 d 13 Statutory employee Retirement plan Third-party 12b sick pay 14 Other 12c Parking $1,680.00 0 0 0 0 d e 120 0 0 0 f Employee's address and ZIP code 15 State Employer's 16 State wages, tips, FL state ID number etc. 19 Local income 20 Locality name 17 State income tax 18 Local wages, tips, etc. tax Department of the Treasury-Internal Revenue Service Form W-2 Wage and Tax Statement 2020 Copy B-To Be Filed With Employee's FEDERAL Tax Return. This information is being furnished to the Internal Revenue Service. Includes any taxable fringe benefits. Carl and Mary's Form 1099-INT Carl and Mary received the following 1099-INT: - CORRECTED (if checked) Payer's RTN (optional) OMB No. 1545-0112 PAYER'S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. Interest 2020 1 Interest income Income Coral Reef Bank 3102 Simonton Street Key West, FL 33040 $426.19 Form 1099-INT 2 Early withdrawal penalty PAYER'S TIN RECIPIENT'S TIN 3 Interest on U.S. Savings Bonds and Treas. obligations Copy B 31-1234444 633-65-7912 $ For Recipient 5 Investment expenses RECIPIENT'S name Mary Duval and Carl Conch 4 Federal income tax withheld $ $ 6 Foreign tax paid 7 Foreign country or U.S. possession Street address (including apt. no.) 1234 Mallory Sq. Apt 64 $ 8 This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. Tax-exempt interest 9 Specified private activity bond interest $ City or town, state or province, country, and ZIP or foreign postal code Key West, FL 33040 $ 10 Market discount 11 Bond premium FATCA filing requirement 12 Bond premium on Treasury obligations $ 13 Bond premium on tax-exempt bond $ Account number (see instructions) 15 State 17 State tax withheld 14 Tax-exempt and tax credit bond CUSIP 16 State identification $ no. no. Form 1099-INT (keep for your records) www.irs.gov/Form 1099INT Department of the Treasury - Internal Revenue Service Mary's Form Form 1099-G Mary received unemployment compensation as shown on the following Form 1099-G: - CORRECTED (if checked) PAYER'S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. 1 Unemployment compensation $ 3,100.24 OMB No. 1545-0120 Certain 2020 2 State or local income tax refunds, credits, or offsets Florida Dept of Econ Opportunity 107 E. Jefferson Blvd. Tallahassee, FL 32399 Government Payments Form 1099-G $ PAYER'S TIN 21-5556666 RECIPIENT'S TIN 633-65-7912 3 Box 2 amount is for tax year 4 Federal income tax withheld $ $ 180.00 5 RTAA payments 6 Taxable grants RECIPIENT'S name Mary Duval $ $ Agriculture payments Street address (including apt. no.) 1234 Mallory Square Apt 64 8 If checked, box 2 is trade or business income $ Copy B For Recipient This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. O City or town, state or province, country, and ZIP or foreign postal code Key West, FL 33040 Market gain Account number (see instructions) 10a State 10b State identification 11 State income tax withheld no. $ Form 1099-G (keep for your records) www.irs.gov/Form 1099G Department of the Treasury - Internal Revenue Service Form 1040 Complete Carl and Mary's Form 1040. Form Department of the Treasury-Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2020 OMB No. 1545-0074 IRS Use Only Filing Status Your first name and middle initial Last name Your social security number Carl Conch 835-21-5423 If joint return, spouse's first name and middle initial Last name Spouse's social security number Mary Duval 633-65-7912 Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign 1234 Mallory Square 64 Check here if you, or your spouse if City, town, or post office. If you have a foreign address, also complete State ZIP code filing jointly, want $3 to go to this spaces below. fund. Checking a box below will not FL 33040 Key West change your tax or refund. Foreign country name Foreign province/state/country Foreign postal code At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Standard Someone can claim: Deduction Age/Blindness You: Spouse: (see instructions): (1) First name Last name (2) Social security (3) Relationship number to you (4) / if qualifies for (see instructions): Child tax credit Credit for other dependents Dependents If more than four dependents, see instructions and check here - O 0 U 1 1 7 7 8 8 9 A 9 Wages, salaries, tips, etc. Attach Form(s) W-2 Attach 2a Tax-exempt interest .. 2a b Taxable interest. 2b Sch. B if required. 3a Qualified dividends ... b Ordinary dividends. 3b 4a IRA distributions .... 4a b Taxable amount.. 4b 5a Pensions and annuities 5a d Taxable amount. 5b Standard 6a Social security benefits b Taxable amount 6b Deduction for- Capital gain or loss). Attach Schedule D if required. If not required, check here ... Single or Married filing Other income from Schedule 1, line 9 separately, $12,400 Add lines 1, 2b, 3b, 46, 56, 66, 7, and 8. This is your total income. Married filing 10 Adjustments to income: jointly or Qualifying a From Schedule 1, line 22. 10a widow(er), b Charitable contributions if you take the standard deduction. $24,800 See instructions .. 10b Head of household, c Add lines 10 and 10b. These are your total adjustments to income. 100 $18,650 11 Subtract line 10c from line 9. This is your adjusted gross income 11 If you checked any box under 12 Standard deduction or itemized deductions (from Schedule A) Standard Deduction, see 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A. instructions. 14 Add lines 12 and 13. 14 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-O- For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2020) 7 + 12 13 15 Form 1040 (2020) Page 2 16 16 Tax (see instructions). Check if any from Form(s): 1 - 8814 2 - 4972 3 - Amount from Schedule 2, line 3 Add lines 16 and 17 17 17 18 18 19 19 20 20 21 21 22 23 23 24 a Child tax credit or credit for other dependents Amount from Schedule 3, line 7. Add lines 19 and 20 22 Subtract line 21 from line 18. If zero or less, enter-O- Other taxes, including self-employment tax, from Schedule 2, line 10 24 Add lines 22 and 23. This is your total tax 25 Federal income tax withheld from: Form(s) W-2. 25a b Form(s) 1099 25b c Other forms (see instructions). 250 d Add lines 25a through 25c... . If you have a 2020 estimated tax payments and amount applied from 2019 return qualifying child, attach Sch. EIC. 27 Earned income credit (EIC)..... If you have 27 nontaxable Additional child tax credit. Attach Schedule 8812 combat pay, see 28 instructions. American opportunity credit from Form 8863, line 8...... 250 26 26 28 29 29 Recovery rebate credit. See instructions.. 30 30 Amount from Schedule 3, line 13..... 31 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 33 33 34 Refund Add lines 25d, 26, and 32. These are your total payments ... If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid... 35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here - 34 35a Direct deposit? b Routing number c Type: Checking Savings See instructions. d Account number 36 Amount of line 34 you want applied to your 2021 estimated tax. 36 37 Subtract line 33 from line 24. This is the amount you owe now. 37 Amount You Owe Note: Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for 2020. See Schedule 3, line 12e, and its instructions for details. For details on how to pay, see instructions. 38 Estimated tax penalty (see instructions) .............. 38 Do you want to allow another person to discuss this return with the IRS? See instructions. Third Party Designee Yes. Complete below. No Phone Designee's name Personal identification number (PIN) no. Sign Here 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 complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Pie Maker (see inst.) Joint return? See instructions. Keep a copy for your records. Spouse's occupation Spouse's signature. If a joint Date return, both must sign. If the IRS sent your spouse an Identity Protection PIN, enter it here Unemployed (see inst.) Phone no. Email address Preparer's name Preparer's signature Date Paid | Check if: Self-employed Firm's name Phone no. Preparer Use Only Firm's address Firm's EIN Go to www.irs.gov/Form 1040 for instructions and the latest information. Form 1040 (2020) Schedule 1 Complete Carl and Mary's Schedule 1. 1 SCHEDULE 1 OMB No. 1545-0074 (Form 1040) Additional Income and Adjustments to Income 2020 Department of the Treasury Attach to Form 1040, 1040-SR, or 1040-NR. Attachment Internal Revenue Service Go to www.irs.gov/Form1040 for instructions and the latest information. Sequence No. 01 Name(s) shown on Form 1040, 1040-SR, or 1040-NR Your social security number Carl Conch and Mary Duval 835-21-5423 Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes. 2a Alimony received b Date of original divorce or separation agreement (see instructions) Business income or loss). Attach Schedule C.. Other gains or losses). Attach Form 4797. Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 6 Farm income or (loss). Attach Schedule F 6 1 Unemployment compensation .. Other income. List type and amount 2a 3 3 4 4 5 5 7 8 CO 9 9 Combine lines 1 through 8. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8 Part II Adjustments to Income 10 Educator expenses 10 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 11 12 Health savings account deduction. Attach Form 8889 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 Moving expenses for members of the Armed Forces. Attach Form 3903.... 13 14 Deductible part of self-employment tax. Attach Schedule SE... 14 15 Self-employed SEP, SIMPLE, and qualified plans.. 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings 17 18a 18a Alimony paid. b Recipient's SSN. c Date of original divorce or separation agreement (see instructions) 19 IRA deduction .. 19 20 Student loan interest deduction. 20 21 Tuition and fees deduction. Attach Form 8917 21 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 1040-SR, or 1040-NR, line 10a... 22 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 71479F Schedule 1 (Form 1040) 2020 Tax Table Click here to access the tax table for this problem. The tax table, which is published by the Internal Revenue Service, is used to calculate the tax owed based on a number of variables. To use the tax table, you need to know the taxpayer's taxable income and filing status. Scroll down through the columns for the taxpayer's taxable income (the ranges listed are in increments of $50). Locate the range that includes the taxpayer's taxable income. Locate the tax figure that corresponds to the taxpayer's filing status