Daniel B Butler and his spouse Freida C Butler file a joint return The Butlers live at 625 Oak Street in Corbin, KY 40701 Dan's Social Security number is 111 11 1112, and Freida's is 123 45 6780 Dan was born on January 15, 1969, and Freida was born on August 20, 1970 During 2020, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home Gina, their daughter, age 22, a full time student, who married on December 21, has no income of her own and did not file a joint return with her husband, Casey, who earned $10,600 during 2020 Gina's Social Security number is 123 45 6788 Willie, their son, age 19, graduated high school in May 2020 He is taking a leap year and will not begin college until 2021 He had gross income of $6,300 in 2020 Willie's Social Security number is 123 45 6787 Ben, their oldest son, age 26, is a full time graduate student with gross income of $5,200 Ben's Social Security number is 123 45 6786 Dan was employed as a manager by WJJJ, Inc (employer identification number 11 1111111, 604 Franklin Street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc (employer identification number 98 7654321, 899 Central Street, Corbin, KY 40701) Selected information from the W2 forms provided by the employers is presented below Dan and Freida use the cash method Line Description Dan Freida 1 Wages, tips, other compensation $74,000 $86,000 2 Federal income tax withheld 11,000 12,400 17 State income tax withheld 2,960 3,440 Freida sold a house on December 30, 2020, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W2) on the January 10, 2021, closing date Other income (as reported on 1099 Forms) for 2020 consisted of the following Dividends on CSX stock (qualified) $4,200 Interest on savings at Second Bank 1,600 Interest on City of Corbin bonds 900 Interest on First Bank CD 382 The $382 from First Bank was an original issue discount Dan and Freida collected $16,000 on the First Bank CD that matured on September 30, 2020 The CD was purchased on October 1, 2018, for $14,995, and the yield to maturity was 3 3 Dan participated on a game show and won a cash prize of $7,000 In addition to the above information, Dan and Freida's itemized deductions included the following Paid on 2020 Kentucky income tax $700 Personal property tax paid 600 Real estate taxes paid 1,800 Interest on home mortgage (Corbin S L) 4,900 Sales tax from the sales tax table is $1,860 Dan and Freida made Federal estimated tax payments of $8,000 They have never owned or used any virtual currency, and they do not wish to contribute to the Presidential Election Campaign For 2020, they received the correct amount of economic impact payments (2020 recovery credits) The Kentucky income tax rate is 4 Required Compute Dan and Freida's 2020 Federal income tax payable (or refund due) Use Form 1040 and Schedules 1, B and the Qualified Dividends and Capital Gain Tax Worksheet to complete this tax return If there is a tax overpayment, the Butlers would like a refund If additional tax is due, assume no underpayment penalty applies It may be necessary to complete the tax schedules before completing Form 1040 What is tax exempt interest (2a) and qualified dividends (3a) 1 Wages, salaries, tips, etc Attach Form(s) W 2 1 160,000 2a Tax exempt interest 2a 0 b Taxable interest 20 2b 1,982 3a Qualified dividends 3a 0b Ordinary dividends 3b 4,200 4a IRA distributions 5a Pensions and annuities 4a b Taxable amount 4b 5a b Taxable amount 5b 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 00 7,000 9 Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8 This is your total income 9 173,182 10 Adjustments to income a From Schedule 1, line 22 10a b Charitable contributions if you take the standard deduction See instructions 10b

Question

Daniel B  Butler and his spouse Freida C  Butler file a joint return  The Butlers live at 625 Oak Street in Corbin, KY 40701  Dan's Social Security number is 111 11 1112, and Freida's is 123 45 6780  Dan was born on January 15, 1969, and Freida was born on August 20, 1970  During 2020, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home  Gina, their daughter, age 22, a full time student, who married on December 21, has no income of her own and did not file a joint return with her husband, Casey, who earned $10,600 during 2020  Gina's Social Security number is 123 45 6788  Willie, their son, age 19, graduated high school in May 2020  He is taking a leap year and will not begin college until 2021  He had gross income of $6,300 in 2020  Willie's Social Security number is 123 45 6787  Ben, their oldest son, age 26, is a full time graduate student with gross income of $5,200  Ben's Social Security number is 123 45 6786  Dan was employed as a manager by WJJJ, Inc  (employer identification number 11 1111111, 604 Franklin Street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc  (employer identification number 98 7654321, 899 Central Street, Corbin, KY 40701)  Selected information from the W2 forms provided by the employers is presented below  Dan and Freida use the cash method  Line Description Dan Freida 1 Wages, tips, other compensation $74,000 $86,000 2 Federal income tax withheld 11,000 12,400 17 State income tax withheld 2,960 3,440 Freida sold a house on December 30, 2020, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W2) on the January 10, 2021, closing date  Other income (as reported on 1099 Forms) for 2020 consisted of the following  Dividends on CSX stock (qualified) $4,200 Interest on savings at Second Bank 1,600 Interest on City of Corbin bonds 900 Interest on First Bank CD 382 The $382 from First Bank was an original issue discount  Dan and Freida collected $16,000 on the First Bank CD that matured on September 30, 2020  The CD was purchased on October 1, 2018, for $14,995, and the yield to maturity was 3 3   Dan participated on a game show and won a cash prize of $7,000  In addition to the above information, Dan and Freida's itemized deductions included the following  Paid on 2020 Kentucky income tax $700 Personal property tax paid 600 Real estate taxes paid 1,800 Interest on home mortgage (Corbin S L) 4,900 Sales tax from the sales tax table is $1,860  Dan and Freida made Federal estimated tax payments of $8,000  They have never owned or used any virtual currency, and they do not wish to contribute to the Presidential Election Campaign  For 2020, they received the correct amount of economic impact payments (2020 recovery credits)  The Kentucky income tax rate is 4   Required  Compute Dan and Freida's 2020 Federal income tax payable (or refund due)  Use Form 1040 and Schedules 1, B and the Qualified Dividends and Capital Gain Tax Worksheet to complete this tax return  If there is a tax overpayment, the Butlers would like a refund  If additional tax is due, assume no underpayment penalty applies  It may be necessary to complete the tax schedules before completing Form 1040  What is tax exempt interest (2a) and qualified dividends (3a)  1 Wages, salaries, tips, etc  Attach Form(s) W 2   1 160,000 2a Tax exempt interest   2a 0 b Taxable interest     20 2b 1,982 3a Qualified dividends    3a 0b Ordinary dividends       3b 4,200 4a IRA distributions         5a Pensions and annuities 4a b Taxable amount     4b 5a b Taxable amount       5b 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 00 7,000 9 Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8  This is your total income       9 173,182 10 Adjustments to income  a From Schedule 1, line 22    10a b Charitable contributions if you take the standard deduction  See instructions         10b

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To compute Dan and Freidas 2020 Federal income tax payable or refund due we need to go through the steps of completing Form 1040 Schedules 1 and B and using the Qualified Dividends and Capital Gain Ta...

Daniel B. Butler and his spouse Freida C. Butler file a joint return. The Butlers live at 625 Oak Street in Corbin, KY 40701. Dan's

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Line	Description	Dan	Freida
1	Wages, tips, other compensation	$74,000	$86,000
2	Federal income tax withheld	11,000	12,400
17	State income tax withheld	2,960	3,440

Dividends on CSX stock (qualified)		$4,200
Interest on savings at Second Bank		1,600
Interest on City of Corbin bonds		900
Interest on First Bank CD		382

Paid on 2020 Kentucky income tax		$700
Personal property tax paid		600
Real estate taxes paid		1,800
Interest on home mortgage (Corbin S&L)		4,900