CP4 (C10.41)

TRP.10.41

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Instructions

Form 1040

Schedule A

Schedule B

2020 Tax Rate Schedules

Tax Planning for 2021

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Instructions

Question Content Area

Note: This problem is for the 2020 tax year.

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6784 and 111-11-1113, respectively. Alice's birthday is September 21, 1973, and Bruce's is June 27, 1972. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (Employer Identification Number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (Employer Identification Number 11-1111111).

The following information is shown on their Wage and Tax Statements (Form W2) for 2020.

Line	Description	Alice	Bruce
1	Wages, tips, other compensation	$58,000	$62,100
2	Federal income tax withheld	4,500	5,300
3	Social Security wages	58,000	62,100
4	Social Security tax withheld	3,596	3,850
5	Medicare wages and tips	58,000	62,100
6	Medicare tax withheld	841	900
15	State	Massachusetts	Massachusetts
16	State wages, tips, etc.	58,000	62,100
17	State income tax withheld	2,950	3,100

The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1996, Social Security number 123-45-6788) and John (born February 7, 2000, Social Security number 123-45-6780). Both children are full-time students and live with the Byrds except when they are away at college. Cynthia earned $6,200 from a summer internship in 2020, and John earned $3,800 from a part-time job. Both children received scholarships covering tuition and materials.

During 2020, the Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (born March 6, 1944, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $1,600,000 on December 28.

The Byrds had the following expenses relating to their personal residence during 2020:

Real estate property taxes	$5,000
Qualified interest on home mortgage (acquistion indebtedness)	8,700
Repairs to roof	5,750
Utilities	4,100
Fire and theft insurance	1,900

The Byrds had the following medical expenses for 2020:

Medical insurance premiums	$4,500
Doctor bill for Sam incurred in 2019 and not paid until 2020	7,600
Operation for Sam	8,500
Prescription medicines for Sam	900
Hospital expenses for Sam	3,500
Reimbursement from insurance company, received in 2020	3,600

The medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support.

Other relevant information follows:

When they filed their 2019 state return in 2020, the Byrds paid additional state income tax of $900.

During 2020, Alice and Bruce attended a dinner dance sponsored by the Lowell Police Disability Association (a qualified charitable organization). The Byrds paid $300 for the tickets. The cost of comparable entertainment would normally be $50.

The Byrds contributed $5,000 to Lowell Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of $350) to the Salvation Army. All donations are supported by receipts, and the clothing is in very good condition.

Via a crowdfunding site (gofundme.com), Alice and Bruce made a gift to a needy family who lost their home in a fire ($400). In addition, they made several cash gifts to homeless individuals downtown (estimated to be $65).

In 2020, the Byrds received interest income of $2,750, which was reported on a Form 1099INT from Second National Bank, 125 Oak Street, Lowell, MA 01850 (Employer Identification Number 98-7654322).

The home mortgage interest was reported on Form 1098 by Lowell Commercial Bank, P.O. Box 1000, Lowell, MA 01850 (Employer Identification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2020) was taken out by the Byrds on May 1, 2016.

Alice's employer requires that all employees wear uniforms to work. During 2020, Alice spent $850 on new uniforms and $566 on laundry charges.

Bruce paid $400 for an annual subscription to the Journal of Franchise Management and $741 for annual membership dues to his professional association.

Neither Alice's nor Bruce's employer reimburses for employee expenses.

The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.

This year the Byrds gave each of their children $2,000, which was then deposited into their Roth IRAs.

Alice and Bruce paid no estimated Federal income tax, and they did not engage in any virtual currency transactions during the year. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campaign Fund. The Byrds received the appropriate recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored.

Required:

Compute net tax payable or refund due for Alice and Bruce Byrd for 2020. If they have overpaid, they want the amount to be refunded to them.

Make realistic assumptions about any missing data.

If an amount box does not require an entry or the answer is zero, enter "0".

Enter all amounts as positive numbers.

It may be necessary to complete the tax schedules before completing Form 1040.

When computing the tax liability, do not round your immediate calculations. If required, round your final answers to the nearest dollar.

Use the Tax Rate Schedule provided. Do not use the Tax Tables.

X

Form 1040

Question Content Area

Complete the Byrd's Form 1040 for 2020.

Form 1040

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

2020

OMB No. 1545-0074

IRS Use Only

Filing Status SingleMarried filing jointlyMarried filing separately (MFS)Head of household (with qualifying person) (HOH)Qualifying widow(er) (QW)Married filing jointly
Your first name and middle initial Bruce M. Byrd		Last name			Your social security number 111-11-1113
If joint return, spouse's first name and middle initial Alice J. Byrd		Last name			Spouse's social security number 123-45-6784
Home address (number and street). If you have a P.O. box, see instructions. 473 Revere Avenue				Apt. no.	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. YesNoNoneNone
City, town, or post office. If you have a foreign address, also complete spaces below. Lowell, MA 01850			State	ZIP code
Foreign country name	Foreign province/state/county			Foreign postal code

At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?

YesNoNo

Standard Deduction	Someone can claim: You as a dependentYour spouse as a dependentSpouse itemizes on a separate return or you were a dual-status alienNoneNone
Age/Blindness	You: Were born before January 2, 1956Are blindWere born before January 2, 1956, Are blindNoneNone Spouse: Was born before January 2, 1956Is blindWas born before January 2, 1956, Is blindNoneNone

Dependents If more than four dependents, see instructions and check here	(see instructions):		(2) Social security number	(3) Relationship to you	(4) if qualifies for (see instructions):
	(1) First name	Last name			Child tax credit	Credit for other dependents
	John Byrd		123-45-6780	Child	YesNoNo	YesNoYes
	Sam Byrd		123-45-6787	Parent	YesNoNo	YesNoYes

Attach Sch. B if required.	1	Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							1	fill in the blank f0d83bfd7f8bfbd_11
	2a	Tax-exempt interest . .	2a		b	Taxable interest . . . . . . . . . .			2b	fill in the blank f0d83bfd7f8bfbd_12
	3a	Qualified dividends . . .	3a		b	Ordinary dividends . . . . . . . .			3b
	4a	IRA distributions . . . . .	4a		b	Taxable amount . . . . . . . . . .			4b
	5a	Pensions and annuities	5a		b	Taxable amount . . . . . . . . . .			5b
Standard Deduction for Single or Married filing separately, $12,400 Married filing jointly or Qualifying widow(er), $24,800 Head of household, $18,650 If you checked any box under Standard Deduction, see instructions.	6a	Social security benefits	6a		b	Taxable amount . . . . . . . . . .			6b
	7	Capital gain or (loss). Attach Schedule D if required. If not required, check here . . .							7
	8	Other income from Schedule 1, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							8
	9	Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income . . . . . . . . . . . . .							9	fill in the blank f0d83bfd7f8bfbd_13
	10	Adjustments to income:
	a	From Schedule 1, line 22 . . . . . . . . . . . . . . . . . . . . . . . . . .					10a
	b	Charitable contributions if you take the standard deduction. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					10b
	c	Add lines 10a and 10b. These are your total adjustments to income . . . . . . . . . . .							10c
	11	Subtract line 10c from line 9. This is your adjusted gross income . . . . . . . . . . . . . .							11	fill in the blank f0d83bfd7f8bfbd_14
	12	Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . . . . .							12	fill in the blank f0d83bfd7f8bfbd_15
	13	Qualified business income deduction. Attach Form 8995 or Form 8995-A . . . . . . . . . . . .							13
	14	Add lines 12 and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							14	fill in the blank f0d83bfd7f8bfbd_16
	15	Taxable income. Subtract line 14 from line 11. If zero or less, enter -0- . . . . . . . . . . . .							15	fill in the blank f0d83bfd7f8bfbd_17

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

Form 1040 (2020)

Form 1040 (2020)

Bruce M. and Alice J. Byrd

111-11-1113

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Tax (see instructions). Check if any from Form(s): 1 8814 2 4972 3 . .

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fill in the blank f0d83bfd7f8bfbd_18