Decision Making

Tax Forms Problem

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 $15,1971,$ and Freida was born on August $20,1971.$

During $2022,$ 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 $$10,600$ during $2022.$ Gina$$s Social Security number is $123-45-6788.$

Willie, their son, age $19,$ graduated high school in May $2022.$ He is taking a leap year and will not begin college until $2023.$ He had gross income of $$6,300$ in $2022.$ Willie$$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 W$2$ 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 $11,00012,400$

$17$ State income tax withheld $2,9603,440$

$$

Freida sold a house on December $30,2022,$ and will be paid a commission of $$3,100($not included in the $$86,000$ reported on the W$2)$ on the January $10,2023,$ closing date.

Other income $($as reported on $1099$ forms$)$ for $2022$ 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 $30,2022.$ The CD was

purchased on October $1,2019,$ for $$14,995,$ and the yield to maturity was $3\mathrm{.}3\%.$ 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:

Sales tax from the sales tax table is $$1,860.$ Dan and Freida made Federal estimated

tax payments of $$6,000.$ They have never owned or used any digital assets, and they

do not wish to contribute to the Presidential Election Campaign. The Kentucky income

tax rate is $4\%.$

Compute Dan and Freida's $2022$ Federal income tax payable $($or refund due$),$ and

complete their $2022$ tax return using the appropriate forms and schedules. Suggested

software: ProConnect Tax.