Comprehensive Problem 6-60 (LO 6-1, LO 6-2, LO 6-3) (Algo) [The following information applies to the questions displayed below.] Read the following letter and help Shady Slim with his tax situation. Please assume that his gross income is $173,830 (which consists only of salary) for purposes of this problem. December 31, 2021 To the friendly student tax preparer: Hi, it's Shady Slim again. I just got back from my 55th birthday party, and I'm told that you need some more information from me in order to complete my tax return. I'm an open book! I'll tell you whatever I think you need to know. Let me tell you a few more things about my life. As you may recall, I am divorced from my wife, Alice. I know that it's unusual, but I have custody of my son, Shady Jr. The judge owed me a few favors and I really love the kid. He lives with me full time and my ex-wife gets him every other weekend. I pay the vast majority of my son's expenses. I think Alice should have to pay some child support, but she doesn't have to pay a dime. The judge didn't owe me that much, I guess. I had to move this year after getting my job at Roca Cola. We moved on February 3 of this year, and I worked my job at Roca Cola for the rest of the year. I still live in the same state, but I moved 500 miles away from my old house. I hired a moving company to move our stuff at a cost of $2,330, and I drove Junior in my car. Junior and I got a hotel room along the way that cost us $65 (I love Super 8!). Can you believe I'm still paying off my student loans, even after 15 years? I paid a total of $19.080 in interest on my old student loans this year. Remember when I told you about that guy that hit me with his car? I had a bunch of medical expenses that were not reimbursed by the lawsuit or by my insurance. I incurred a total of $20,300 in medical expenses, and I was only reimbursed for $11,150. Good thing I can write off medical expenses, right? I contributed a lot of money to charity this year and have receipt documentation for all contributions). I'm such a nice guy! gave $1,030 in cash to the March of Dimes. I contributed some of my old furniture to the church. It was some good stuff! contributed a red velvet couch and my old recliner. The furniture is considered vintage and is worth $5,150 today (the appraiser surprised me!), even though I only paid $1,030 for it back in the day. When I contributed the furniture, the pastor said he didn't like the fabric and was going to sell the furniture to pay for some more pews in the church. Oh well, some people just have no taste, right? Roca Cola had a charity drive for the United Way this year and I contributed $108. Turns out, I don't even miss it because Roca Cola takes it right off my paycheck every month $18 a month starting in July. My pay stub verifies that I contributed the $108 to the United Way. Oh, one other bit of charity from me this year. An old buddy of mine was down on his luck. He lost his job and his house. I gave him $515 to help him out. I paid a lot of money in interest this year. I paid a total of $980 in personal credit card interest. I also paid $19,080 in interest on my $530,000 home mortgage that helped me buy my dream home. I also paid $2,060 in real estate taxes for my new house. A few other things I want to tell you about this year. Someone broke into my house and stole my kid's brand new bicycle and my set of golf clubs. The total loss from theft was $930. I paid $140 in union dues this year. I had to pay $1,200 for new suits for my job. Roca Cola requires its managers to wear suits every day on the job. I spent a total of $1,330 to pay for gas to commute to my job this year. Oh, this is pretty cool. I've always wanted to be a firefighter. I spent $1,430 in tuition to go to the local firefighter's school. I did this because someone told me that I can deduct the tuition as an itemized deduction, so the money would be coming back to me. That should be all the information you need right now. Please calculate my taxable income and complete page 1 of Form 1040 (through taxable income, line 15) and Schedule A. You're still doing this for free, right? Comprehensive Problem 6-60 Part b (Algo) b. Complete pages 1 of Form 1040 (through taxable income, line 15) and Schedule A. Shady Slim's address is 19010 N.W. 135th Street, Miami, FL 33054. Social security numbers: Shady Slim: 123-45-6789 Shady Slim Jr: 222-22-2222 (Round your intermediate computations to the nearest whole dollar amount. Input all the values as positive numbers. Enter any non-financial information, (e.g. Names, Addresses, social security numbers) EXACTLY as they appear in any given information or Problem Statement. Use 2021 tax rules regardless of year on form.) wer) (QW) Required information UITVU d LIHU VUL HIUL You UVIVIIL Your first name and middle initial Last name Your social security number Spouse's social security number If joint return, spouse's first name and middle initial Last name Home address (number and street). If you have a PO box, see instructions Apt.no Presidential Election Campaign City, town, or post office. If you have a foreign address, also complete spaces below. . State ZIP code Check here if you, or your spouse if filing jointly, want 53 to go to this fund. Checking a box below will not change your tax or refund. Foreign country name Foreign province/state/county Foreign postal code You Spouse At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Standard Someone can claim You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual status alien Age/Blindness You: Were born before January 2, 1956 2 Are blind Spouse: was born before January 2, 1956 Is blind Dependents (see instructions) (2) Social security number (3) Relationship to you (4) If qualities for (see instructions) (1) First name Last name Child tax credit Credit for other dependents If more than four dependents, see instructions and check here 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 173,830 Attach Sch. Bit 2a Tax-exempt interest 2a 20 b Taxable interest required 3a Qualified dividends 3a b Ordinary dividends 30 4a IRA distributions 4a b Taxable amount 4b 5a Pensions and annuities 5a b Taxable amount 50 6a Social security benefits b b Taxable amount 6b 7 Capital gain or loss). Attach Schedule D if required. If not required, check here 7 Standard Deduction for- 8 Other income from Schedule 1, line 9 8 . Single or Married filing separately 9 Add lines 1, 2, 3, 4, 5, 6, 7, and 8. This is your total income 9 173,830 $12.400 Married filing 10 Adjustments to income: jointly or Qualifying 10a widower) a From Schedule 1, line 22 $24.800 b Charitable contributions if you take the standard deduction. See instructions 10b Head of household c Add lines 10a and 10b. These are your total adjustments to income $18,650 100 If you checked 11 11 Subtract line 10c from line 9. This is your adjusted gross income 173,830 any box under Standard 12 Standard deduction or itemized deductions (from Schedule A) 12 Deduction, see instructions 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A . 13 14 Add lines 12 and 13 14 0 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter -- 15 173,830 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2020) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. Requir 1040 PG 1 Schedule A Form 1040 Schedule A. OMB No. 1545-0074 SCHEDULE A (Form 1040) ) Itemized Deductions Go to www.irs.gov/Schedule A for instructions and the latest information. 2020 Department of the Treasury Attach to Form 1040 or 1040-SR. Caution: If you are claiming a net qualified disaster loss on Form 4684, see the instructions for line 16 Attachment Sequence No. 07 Internal Revenue Service (99) Name(s) shown on Form 1040 or 1040-SR s Your social security number Medical and Dental Expenses 9,000 173,830 Caution: Do not include expenses reimbursed or paid by others, 1 Medical and dental expenses (see instructions) 2 Enter amount from Form 1040 or 1040-SR, line 11 2 3 Multiply line 2 by 7.5% (0.075) 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter-O- 5 State and local taxes. 3 12.968 4 0 Taxes You Paid a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box 5a 5b 2,000 5c 50 2.000 b State and local real estate taxes (see instructions) c State and local personal property taxes d Add lines 5a through 5c d e Enter the smaller of line 5d or $10,000 (55,000 if married filing separately) 6 Other taxes. List type and amount 5e 2,000 6 7 Add lines 5e and 6 7 2,000 Interest You Paid 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy build, or improve your home, see instructions and check this box a Home mortgage interest and points reported to you on Form 1098. See Instructions if limited Sa 18 000 Caution: Your mortgage interest deduction may be limited (S00 instruction) b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8b Sc c Points not reported to you on Form 1098. See instructions for special rules d Mortgage insurance premiums (see instructions) e Add lines 8a through 8d. 8d Be 9 Investment interest. Attach Form 4952 if required. See Instructions 9 10 Add lines Be and 9 10 18,000 Add lines be and b 2,000 Interest You Paid 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box a Home mortgage interest and points reported to you on Form 1098. See instructions if limited 8a 18,000 Caution: Your mortgage interest deduction may be limited (see instruction) b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8b c Points not reported to you on Form 1098. See instructions for special rules 8c 8d d Mortgage insurance premiums (see instructions) e Add lines 8a through 8d 8e 9 Investment interest. Attach Form 4952 if required. See instructions 9 10 Add lines 8e and 9 10 18,000 11 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, see instructions Charity 12 Other than by cash or check. If you made any gift of $250 or more, see instructions. You must attach Form 8283 if over $500 Caution: If you made a gift and got a benefit 13 Carryover from prior year for it, see instructions. 14 Add lines 11 through 13 12 13 14 0 Casualty and Theft Losses 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions 15 16 Otherfrom list in instructions. List type and amount Other Itemized Deductions 16 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Form 1040 or 1040-SR, line 12 17 20,000 Total Itemized Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction, check this box For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Cat. No. 17145C Schedule A (Form 1040) 2020 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. Comprehensive Problem 6-60 (LO 6-1, LO 6-2, LO 6-3) (Algo) [The following information applies to the questions displayed below.] Read the following letter and help Shady Slim with his tax situation. Please assume that his gross income is $173,830 (which consists only of salary) for purposes of this problem. December 31, 2021 To the friendly student tax preparer: Hi, it's Shady Slim again. I just got back from my 55th birthday party, and I'm told that you need some more information from me in order to complete my tax return. I'm an open book! I'll tell you whatever I think you need to know. Let me tell you a few more things about my life. As you may recall, I am divorced from my wife, Alice. I know that it's unusual, but I have custody of my son, Shady Jr. The judge owed me a few favors and I really love the kid. He lives with me full time and my ex-wife gets him every other weekend. I pay the vast majority of my son's expenses. I think Alice should have to pay some child support, but she doesn't have to pay a dime. The judge didn't owe me that much, I guess. I had to move this year after getting my job at Roca Cola. We moved on February 3 of this year, and I worked my job at Roca Cola for the rest of the year. I still live in the same state, but I moved 500 miles away from my old house. I hired a moving company to move our stuff at a cost of $2,330, and I drove Junior in my car. Junior and I got a hotel room along the way that cost us $65 (I love Super 8!). Can you believe I'm still paying off my student loans, even after 15 years? I paid a total of $19.080 in interest on my old student loans this year. Remember when I told you about that guy that hit me with his car? I had a bunch of medical expenses that were not reimbursed by the lawsuit or by my insurance. I incurred a total of $20,300 in medical expenses, and I was only reimbursed for $11,150. Good thing I can write off medical expenses, right? I contributed a lot of money to charity this year and have receipt documentation for all contributions). I'm such a nice guy! gave $1,030 in cash to the March of Dimes. I contributed some of my old furniture to the church. It was some good stuff! contributed a red velvet couch and my old recliner. The furniture is considered vintage and is worth $5,150 today (the appraiser surprised me!), even though I only paid $1,030 for it back in the day. When I contributed the furniture, the pastor said he didn't like the fabric and was going to sell the furniture to pay for some more pews in the church. Oh well, some people just have no taste, right? Roca Cola had a charity drive for the United Way this year and I contributed $108. Turns out, I don't even miss it because Roca Cola takes it right off my paycheck every month $18 a month starting in July. My pay stub verifies that I contributed the $108 to the United Way. Oh, one other bit of charity from me this year. An old buddy of mine was down on his luck. He lost his job and his house. I gave him $515 to help him out. I paid a lot of money in interest this year. I paid a total of $980 in personal credit card interest. I also paid $19,080 in interest on my $530,000 home mortgage that helped me buy my dream home. I also paid $2,060 in real estate taxes for my new house. A few other things I want to tell you about this year. Someone broke into my house and stole my kid's brand new bicycle and my set of golf clubs. The total loss from theft was $930. I paid $140 in union dues this year. I had to pay $1,200 for new suits for my job. Roca Cola requires its managers to wear suits every day on the job. I spent a total of $1,330 to pay for gas to commute to my job this year. Oh, this is pretty cool. I've always wanted to be a firefighter. I spent $1,430 in tuition to go to the local firefighter's school. I did this because someone told me that I can deduct the tuition as an itemized deduction, so the money would be coming back to me. That should be all the information you need right now. Please calculate my taxable income and complete page 1 of Form 1040 (through taxable income, line 15) and Schedule A. You're still doing this for free, right? Comprehensive Problem 6-60 Part b (Algo) b. Complete pages 1 of Form 1040 (through taxable income, line 15) and Schedule A. Shady Slim's address is 19010 N.W. 135th Street, Miami, FL 33054. Social security numbers: Shady Slim: 123-45-6789 Shady Slim Jr: 222-22-2222 (Round your intermediate computations to the nearest whole dollar amount. Input all the values as positive numbers. Enter any non-financial information, (e.g. Names, Addresses, social security numbers) EXACTLY as they appear in any given information or Problem Statement. Use 2021 tax rules regardless of year on form.) wer) (QW) Required information UITVU d LIHU VUL HIUL You UVIVIIL Your first name and middle initial Last name Your social security number Spouse's social security number If joint return, spouse's first name and middle initial Last name Home address (number and street). If you have a PO box, see instructions Apt.no Presidential Election Campaign City, town, or post office. If you have a foreign address, also complete spaces below. . State ZIP code Check here if you, or your spouse if filing jointly, want 53 to go to this fund. Checking a box below will not change your tax or refund. Foreign country name Foreign province/state/county Foreign postal code You Spouse At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Standard Someone can claim You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual status alien Age/Blindness You: Were born before January 2, 1956 2 Are blind Spouse: was born before January 2, 1956 Is blind Dependents (see instructions) (2) Social security number (3) Relationship to you (4) If qualities for (see instructions) (1) First name Last name Child tax credit Credit for other dependents If more than four dependents, see instructions and check here 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 173,830 Attach Sch. Bit 2a Tax-exempt interest 2a 20 b Taxable interest required 3a Qualified dividends 3a b Ordinary dividends 30 4a IRA distributions 4a b Taxable amount 4b 5a Pensions and annuities 5a b Taxable amount 50 6a Social security benefits b b Taxable amount 6b 7 Capital gain or loss). Attach Schedule D if required. If not required, check here 7 Standard Deduction for- 8 Other income from Schedule 1, line 9 8 . Single or Married filing separately 9 Add lines 1, 2, 3, 4, 5, 6, 7, and 8. This is your total income 9 173,830 $12.400 Married filing 10 Adjustments to income: jointly or Qualifying 10a widower) a From Schedule 1, line 22 $24.800 b Charitable contributions if you take the standard deduction. See instructions 10b Head of household c Add lines 10a and 10b. These are your total adjustments to income $18,650 100 If you checked 11 11 Subtract line 10c from line 9. This is your adjusted gross income 173,830 any box under Standard 12 Standard deduction or itemized deductions (from Schedule A) 12 Deduction, see instructions 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A . 13 14 Add lines 12 and 13 14 0 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter -- 15 173,830 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2020) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. Requir 1040 PG 1 Schedule A Form 1040 Schedule A. OMB No. 1545-0074 SCHEDULE A (Form 1040) ) Itemized Deductions Go to www.irs.gov/Schedule A for instructions and the latest information. 2020 Department of the Treasury Attach to Form 1040 or 1040-SR. Caution: If you are claiming a net qualified disaster loss on Form 4684, see the instructions for line 16 Attachment Sequence No. 07 Internal Revenue Service (99) Name(s) shown on Form 1040 or 1040-SR s Your social security number Medical and Dental Expenses 9,000 173,830 Caution: Do not include expenses reimbursed or paid by others, 1 Medical and dental expenses (see instructions) 2 Enter amount from Form 1040 or 1040-SR, line 11 2 3 Multiply line 2 by 7.5% (0.075) 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter-O- 5 State and local taxes. 3 12.968 4 0 Taxes You Paid a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box 5a 5b 2,000 5c 50 2.000 b State and local real estate taxes (see instructions) c State and local personal property taxes d Add lines 5a through 5c d e Enter the smaller of line 5d or $10,000 (55,000 if married filing separately) 6 Other taxes. List type and amount 5e 2,000 6 7 Add lines 5e and 6 7 2,000 Interest You Paid 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy build, or improve your home, see instructions and check this box a Home mortgage interest and points reported to you on Form 1098. See Instructions if limited Sa 18 000 Caution: Your mortgage interest deduction may be limited (S00 instruction) b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8b Sc c Points not reported to you on Form 1098. See instructions for special rules d Mortgage insurance premiums (see instructions) e Add lines 8a through 8d. 8d Be 9 Investment interest. Attach Form 4952 if required. See Instructions 9 10 Add lines Be and 9 10 18,000 Add lines be and b 2,000 Interest You Paid 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box a Home mortgage interest and points reported to you on Form 1098. See instructions if limited 8a 18,000 Caution: Your mortgage interest deduction may be limited (see instruction) b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8b c Points not reported to you on Form 1098. See instructions for special rules 8c 8d d Mortgage insurance premiums (see instructions) e Add lines 8a through 8d 8e 9 Investment interest. Attach Form 4952 if required. See instructions 9 10 Add lines 8e and 9 10 18,000 11 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, see instructions Charity 12 Other than by cash or check. If you made any gift of $250 or more, see instructions. You must attach Form 8283 if over $500 Caution: If you made a gift and got a benefit 13 Carryover from prior year for it, see instructions. 14 Add lines 11 through 13 12 13 14 0 Casualty and Theft Losses 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions 15 16 Otherfrom list in instructions. List type and amount Other Itemized Deductions 16 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Form 1040 or 1040-SR, line 12 17 20,000 Total Itemized Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction, check this box For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Cat. No. 17145C Schedule A (Form 1040) 2020 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education