Document Review Simulation -- Harris and Carly Franklin - SPRING 2022 Answer the 15 items below on Blackboard in the Document Review Simulation Spring 2022 tab under Course Material. See your syllabus for the due date and time. Based on the interview notes and the documents below, answer the following items relative to their 2020 Form 1040. If an amount is negative, put a minus (-) before the number. If an amount is zero, write 0. The parenthetical reference for an item is to the 2020 forms and schedules. 1. Wages, salaries, tips, etc. (Form 1040, line 1) $ 2. Business income or deductible loss (Schedule 1, line 3) $. 3. Rental real estate income or deductible loss (Schedule 1, line 5) $_ 4. Other income (Schedule 1, line 8) $ 5. Educator expenses (Schedule 1, line 10) $ 6. Self-employment tax deduction (Schedule 1, line 14) $ 7. Student loan interest deduction (Schedule 1, line 20) $ 8. Qualified business income (QBI) deduction (1040, line 13) $ 9. Child tax credit (Form 1040, line 19), nonrefundable amount $ S 10. Federal income tax withheld (Form 1040, line 25d) $ 11. Child/dependent care credit (Schedule 3, line 2) $ 12. Education credit (Schedule 3, line 3), nonrefundable amount $ 13. Amount of elective deferral into his 401(k) plan $ 14. Recovery rebate credit (Form 1040, line 30) $. 15. Standard deduction or itemized deductions (Form 1040, line 12) $ INTERVIEW NOTES 1. Harris Franklin (DOB 03/30/1980, SSN 604-05-7777, legally blind) and Carly Franklin (DOB 05/27/1981, SSN 605-05-8888) are married and want to file their 2020 tax return married filing jointly. They have one son Billy Franklin (DOB 04/01/2014, SSN 606-05- 5555) and a newborn baby Cristina Franklin (DOB 01/02/2020, SSN 607-05-9999) who lived with them all year. They provided the entire cost of maintaining the household and all the support for themselves and their two children. They are all US citizens, have valid social security numbers, and are all covered by health insurance. 2. Carly was a kindergarten teacher at a private school through June 2020. She worked a total of 960 hours in 2020 as a teacher (January - June). She spent $375 on unreimbursed classroom expenses while she was employed. 3. Carly tells you in the interview that she won $950 playing bingo (no W-2G was required to be issued) but she also has $500 of bingo losses. 4. In order to work, the Franklins paid child care expenses of $1,500 through June for Billy. They also paid $750 in child care expenses for Cristina. 5. The Franklins were not medically or financially affected by the COVID-19 pandemic. They received Economic Impact Payments (EIP) in 2020 as follows: the first stimulus payment was $3,400 and the second one was $2,400, for a total of $5,800. 6. In August 2020, Harris, who is employed as a bookkeeper, enrolled in college to pursue a bachelor's degree in accounting. He provided Form 1098-T and an account statement from the college that included additional expenses. Harris had no previous post-secondary education. Gordon College is a qualified educational institution. Harris does not have a felony drug conviction. 7. In July 2020, after quitting her job as a teacher, Carly decided to open a housecleaning business. For 2020, she has documentation for the following income and expenses: Fees received $21,000 Supplies 4,620 Advertising expenses 1,100 2 Business gifts to 5 clients ($60 value per client gift) 300 Business computer purchased and put into service 12/1/2020 2,180 Carly would like to take the maximum deduction for these expenses in 2020. 8. The Franklins purchased a rent house on 1/2/2020 for $160,000 ($90,000 allocated to the structure and $70,000 allocated to the land). The address is 100 Drew Street, Houston, TX 77006. They immediately rented the house and has the following income and expenses for 2020: Rental income received ($700 x $12) $8,400 Mortgage interest $5,500 Maintenance expenses $1,040 Real estate taxes 3,560 Homeowner's insurance 2,400 The Franklins actively participated in the management of the rent house but are not real estate professionals. The rental activity is not a qualified trade/business. 9. For 2020, the Franklins made estimated quarterly tax payments in the amount of $500 per quarter. The payments were made by their due dates. They do not want to defer any self-employment tax payments for 2020. Note: Manually or using tax software, complete the 2020 tax return, including Form 1040 and all appropriate forms, schedules, and worksheets. Answer the 15 questions above. When entering social security number (SSNs) or employer identification numbers (EINs), replace any Xs with digits of your choice. ARS a Employee's social security number 604-00-XXXX Employer identification number (EIN) 34-600XXXX c Employer's name, adress, and ZIP code GILMORE ACCOUNTING CORPORATION 2250 DELTA AVENUE YOUR CITY, STATE ZIP Safo, accurate, Visit the IRS website at e file www.e.poulefia OMB No 1545-0008 FASTI Use 1 Wages, tips, other compensation 2 Federal income tax withitvald 41,502.00 1,200.00 3 Sealal sourity wages 4 Social security tax withhold 42,502.00 2,635.00 5 Medicare wages and tips 6 Medicare tax withheld 42,502.00 616.00 7 Social security tips 8 Allocated tips d Control number 10 Dapundont care benefits Employee's trst name and initia! Last name Sul. 11 Nonqualified plans :D 12a Soo instructions for box 12 1,000.00 12b Rent 13 SE loped Third-party MER HARRIS FRANKLIN 450 SARASOTA TERRACE YOUR CITY, STATE ZIP 14 Other 120 12d Employee's address and ZIP code 15 Sale Employer's state ID number YS 34-600XXXX 18 Local wages, tips, etc. 19 Local Income tax 20 locally and 16 State wages, tips, etc. 17 State income tax 41,502.00 1,604.00 Form W-2 wage and Tax Statement Copy B-To Be Filed With Employee's FEDERAL Tax Return This Information is being furnished to the Internal Revenue Service. 2020 Department of the Treasury-Internal Revenue Service a Employee's social Security number 605-00-XXXX boployer identification number 34-700XXXX Employer's name, address, and ZIP code Safe, Hccurzie, Visit the As website OMB No. 1545-0009 FASTIUS ne file www.lrs.gov/ello 1 Wegea tips other compensation 2 Federal home tax withheld 9,643.00 700.00 3 Social security wages 4 Social security tax withheld 9,643.00 597.87 6 Medicare wages and lips 6 Medicare tax withheld 9,643.00 139,82 7 Soolal security 3 Allocated is DEATON ELEMENTARY SCHOOL 2565 DEATON STREET YOUR CITY, STATE ZIP d Control number 10 Dependent care benefits e Employee's first name and initin Last naine Sul. 11 Honquilled lama 12a See Instructions for box 12 13 ay ople Rett Tad art ply 12b CARLY FRANKLIN 450 SARASOTA TERRACE YOUR CITY, STATE ZIP 14 Other 120 120 1 Employee's address and ZIP code 15 Slate Employer's state ID number YS 34.700XXXX 16 State Wages, tips, etc. 17 State Income tax 9,643.00 120.00 18 Local wagas, lips, etc. 19 Local income tax 20 Lacally name W-2 Wage and Tax Statement Form 2020 Department of the Treasury-Internal Revenue Service 2020 CORRECTED (if checked) RECIPIENT S/LENDER'S name, street address, city or town, state or OMB No. 1545-1578 province, country, ZIP or forsign postal code, and telephone number Student FINANCIAL AID PARTNERS Loan Interest 605 LINCOLN DR YOUR CITY, STATE ZIP Statement Forn 1098-E RECIPIENT'S TIN BOFROWER'S TIN 1 Student loan interest received by lender Copy B 37-700XXXX 605-00-XXXX $ 3,960.00 For Borrower BORROWERS name This is important tax CARLY FRANKLIN information and is being furtilshod to the 18.1 you are required to file a Street Address Including apt. no.) return a negligence penalty or other 450 SARASOTA TERRACE sanction may be imposed on you fit the City or town, state or province, country, and ZIP or foreign postal code IRS determines that an YOUR CITY, STATE ZIP underpayment of tax results because you Account number (see instructions) 2 if checked,box 1 does not include loan origination overstatod a deduction feas and/or capitalized interest for loans made before for student loan interest. September 1, 2004 Forn 1098-E keep for your records) www.insgowFom1098E Department of the Treasury - Internal Revenue Service OMB No 1545-1574 CORRECTED FILER'S name, street address, city or town, state or province, country, ZIP or Payments received for foreign postal code, and telephone number qualified tuition and related expenses GORDON COLLEGE $ 3,750.00 10 COLLEGE AVENUE 2 YOUR CITY, STATE ZIP 2020 Tuition Statement Form 1098-T 3 FILEFS employer identification no. 37-700XXXX STUDENT'S name STUDENT'S TIN 604-00-XXXX Copy B For Student 4 Adjustments made for a prior year 6 Scholarships or granto $ 6 Adjustments to scholarships or grants for a prior year HARRIS FRANKLIN Street address including api. no.) 450 SARASOTA TERRACE City or town, state or province, country, and ZIP or foreign postal code YOUR CITY, STATE ZIP Service Provides/Acet. No. (see instr.) & Check at last halt-time student Form 1098-T (keep for your records) $ 1,025.00 7 Checked if the amount in box 1 Includes amounts for an academic period beginning January March 2021 10 Ins, contract remo/rofund This is important tax information and is being furnished to the IRS. This fom must be used to complete Form 563 to claim education credits. Give it to the tax preparer or use it to prepare the tax return. $ 9 Checked a graduate student X www.is.gov/Form1099T Department of the Treasury - Internal Revenue Service Gordon College Statement of Account December 31, 2020 HARRIS FRANKLIN Student ID 604-00-XXXX Amount Billed +$3,750.00 Amount Paid -$1,025.00 Date Transaction 08/30/2020 Tuition - Fall Semester 2020 08/30/2020 Scholarship 09/03/2020 Parking pass 09/04/2020 Campus Bookstore charge to student account for course-related books 09/05/2020 Payment -check #1234 +$ 125.00 +$ 450.00 -$3,300.00 12/31/2020 Account Balance.... $0.00 Busy Bee Day Care 303 Twiggs Trail Your City, Your State Your Zip Ph: (555) 555-1234 December 31, 2020 Received from Harris and Carly Franklin: $1,500 for after-school care for Billy Franklin $750 for Cristina Franklin Total amount received for child care in 2020 $2,250.00 Ellen River EIN: 35-900XXXX Document Review Simulation -- Harris and Carly Franklin - SPRING 2022 Answer the 15 items below on Blackboard in the Document Review Simulation Spring 2022 tab under Course Material. See your syllabus for the due date and time. Based on the interview notes and the documents below, answer the following items relative to their 2020 Form 1040. If an amount is negative, put a minus (-) before the number. If an amount is zero, write 0. The parenthetical reference for an item is to the 2020 forms and schedules. 1. Wages, salaries, tips, etc. (Form 1040, line 1) $ 2. Business income or deductible loss (Schedule 1, line 3) $. 3. Rental real estate income or deductible loss (Schedule 1, line 5) $_ 4. Other income (Schedule 1, line 8) $ 5. Educator expenses (Schedule 1, line 10) $ 6. Self-employment tax deduction (Schedule 1, line 14) $ 7. Student loan interest deduction (Schedule 1, line 20) $ 8. Qualified business income (QBI) deduction (1040, line 13) $ 9. Child tax credit (Form 1040, line 19), nonrefundable amount $ S 10. Federal income tax withheld (Form 1040, line 25d) $ 11. Child/dependent care credit (Schedule 3, line 2) $ 12. Education credit (Schedule 3, line 3), nonrefundable amount $ 13. Amount of elective deferral into his 401(k) plan $ 14. Recovery rebate credit (Form 1040, line 30) $. 15. Standard deduction or itemized deductions (Form 1040, line 12) $ INTERVIEW NOTES 1. Harris Franklin (DOB 03/30/1980, SSN 604-05-7777, legally blind) and Carly Franklin (DOB 05/27/1981, SSN 605-05-8888) are married and want to file their 2020 tax return married filing jointly. They have one son Billy Franklin (DOB 04/01/2014, SSN 606-05- 5555) and a newborn baby Cristina Franklin (DOB 01/02/2020, SSN 607-05-9999) who lived with them all year. They provided the entire cost of maintaining the household and all the support for themselves and their two children. They are all US citizens, have valid social security numbers, and are all covered by health insurance. 2. Carly was a kindergarten teacher at a private school through June 2020. She worked a total of 960 hours in 2020 as a teacher (January - June). She spent $375 on unreimbursed classroom expenses while she was employed. 3. Carly tells you in the interview that she won $950 playing bingo (no W-2G was required to be issued) but she also has $500 of bingo losses. 4. In order to work, the Franklins paid child care expenses of $1,500 through June for Billy. They also paid $750 in child care expenses for Cristina. 5. The Franklins were not medically or financially affected by the COVID-19 pandemic. They received Economic Impact Payments (EIP) in 2020 as follows: the first stimulus payment was $3,400 and the second one was $2,400, for a total of $5,800. 6. In August 2020, Harris, who is employed as a bookkeeper, enrolled in college to pursue a bachelor's degree in accounting. He provided Form 1098-T and an account statement from the college that included additional expenses. Harris had no previous post-secondary education. Gordon College is a qualified educational institution. Harris does not have a felony drug conviction. 7. In July 2020, after quitting her job as a teacher, Carly decided to open a housecleaning business. For 2020, she has documentation for the following income and expenses: Fees received $21,000 Supplies 4,620 Advertising expenses 1,100 2 Business gifts to 5 clients ($60 value per client gift) 300 Business computer purchased and put into service 12/1/2020 2,180 Carly would like to take the maximum deduction for these expenses in 2020. 8. The Franklins purchased a rent house on 1/2/2020 for $160,000 ($90,000 allocated to the structure and $70,000 allocated to the land). The address is 100 Drew Street, Houston, TX 77006. They immediately rented the house and has the following income and expenses for 2020: Rental income received ($700 x $12) $8,400 Mortgage interest $5,500 Maintenance expenses $1,040 Real estate taxes 3,560 Homeowner's insurance 2,400 The Franklins actively participated in the management of the rent house but are not real estate professionals. The rental activity is not a qualified trade/business. 9. For 2020, the Franklins made estimated quarterly tax payments in the amount of $500 per quarter. The payments were made by their due dates. They do not want to defer any self-employment tax payments for 2020. Note: Manually or using tax software, complete the 2020 tax return, including Form 1040 and all appropriate forms, schedules, and worksheets. Answer the 15 questions above. When entering social security number (SSNs) or employer identification numbers (EINs), replace any Xs with digits of your choice. ARS a Employee's social security number 604-00-XXXX Employer identification number (EIN) 34-600XXXX c Employer's name, adress, and ZIP code GILMORE ACCOUNTING CORPORATION 2250 DELTA AVENUE YOUR CITY, STATE ZIP Safo, accurate, Visit the IRS website at e file www.e.poulefia OMB No 1545-0008 FASTI Use 1 Wages, tips, other compensation 2 Federal income tax withitvald 41,502.00 1,200.00 3 Sealal sourity wages 4 Social security tax withhold 42,502.00 2,635.00 5 Medicare wages and tips 6 Medicare tax withheld 42,502.00 616.00 7 Social security tips 8 Allocated tips d Control number 10 Dapundont care benefits Employee's trst name and initia! Last name Sul. 11 Nonqualified plans :D 12a Soo instructions for box 12 1,000.00 12b Rent 13 SE loped Third-party MER HARRIS FRANKLIN 450 SARASOTA TERRACE YOUR CITY, STATE ZIP 14 Other 120 12d Employee's address and ZIP code 15 Sale Employer's state ID number YS 34-600XXXX 18 Local wages, tips, etc. 19 Local Income tax 20 locally and 16 State wages, tips, etc. 17 State income tax 41,502.00 1,604.00 Form W-2 wage and Tax Statement Copy B-To Be Filed With Employee's FEDERAL Tax Return This Information is being furnished to the Internal Revenue Service. 2020 Department of the Treasury-Internal Revenue Service a Employee's social Security number 605-00-XXXX boployer identification number 34-700XXXX Employer's name, address, and ZIP code Safe, Hccurzie, Visit the As website OMB No. 1545-0009 FASTIUS ne file www.lrs.gov/ello 1 Wegea tips other compensation 2 Federal home tax withheld 9,643.00 700.00 3 Social security wages 4 Social security tax withheld 9,643.00 597.87 6 Medicare wages and lips 6 Medicare tax withheld 9,643.00 139,82 7 Soolal security 3 Allocated is DEATON ELEMENTARY SCHOOL 2565 DEATON STREET YOUR CITY, STATE ZIP d Control number 10 Dependent care benefits e Employee's first name and initin Last naine Sul. 11 Honquilled lama 12a See Instructions for box 12 13 ay ople Rett Tad art ply 12b CARLY FRANKLIN 450 SARASOTA TERRACE YOUR CITY, STATE ZIP 14 Other 120 120 1 Employee's address and ZIP code 15 Slate Employer's state ID number YS 34.700XXXX 16 State Wages, tips, etc. 17 State Income tax 9,643.00 120.00 18 Local wagas, lips, etc. 19 Local income tax 20 Lacally name W-2 Wage and Tax Statement Form 2020 Department of the Treasury-Internal Revenue Service 2020 CORRECTED (if checked) RECIPIENT S/LENDER'S name, street address, city or town, state or OMB No. 1545-1578 province, country, ZIP or forsign postal code, and telephone number Student FINANCIAL AID PARTNERS Loan Interest 605 LINCOLN DR YOUR CITY, STATE ZIP Statement Forn 1098-E RECIPIENT'S TIN BOFROWER'S TIN 1 Student loan interest received by lender Copy B 37-700XXXX 605-00-XXXX $ 3,960.00 For Borrower BORROWERS name This is important tax CARLY FRANKLIN information and is being furtilshod to the 18.1 you are required to file a Street Address Including apt. no.) return a negligence penalty or other 450 SARASOTA TERRACE sanction may be imposed on you fit the City or town, state or province, country, and ZIP or foreign postal code IRS determines that an YOUR CITY, STATE ZIP underpayment of tax results because you Account number (see instructions) 2 if checked,box 1 does not include loan origination overstatod a deduction feas and/or capitalized interest for loans made before for student loan interest. September 1, 2004 Forn 1098-E keep for your records) www.insgowFom1098E Department of the Treasury - Internal Revenue Service OMB No 1545-1574 CORRECTED FILER'S name, street address, city or town, state or province, country, ZIP or Payments received for foreign postal code, and telephone number qualified tuition and related expenses GORDON COLLEGE $ 3,750.00 10 COLLEGE AVENUE 2 YOUR CITY, STATE ZIP 2020 Tuition Statement Form 1098-T 3 FILEFS employer identification no. 37-700XXXX STUDENT'S name STUDENT'S TIN 604-00-XXXX Copy B For Student 4 Adjustments made for a prior year 6 Scholarships or granto $ 6 Adjustments to scholarships or grants for a prior year HARRIS FRANKLIN Street address including api. no.) 450 SARASOTA TERRACE City or town, state or province, country, and ZIP or foreign postal code YOUR CITY, STATE ZIP Service Provides/Acet. No. (see instr.) & Check at last halt-time student Form 1098-T (keep for your records) $ 1,025.00 7 Checked if the amount in box 1 Includes amounts for an academic period beginning January March 2021 10 Ins, contract remo/rofund This is important tax information and is being furnished to the IRS. This fom must be used to complete Form 563 to claim education credits. Give it to the tax preparer or use it to prepare the tax return. $ 9 Checked a graduate student X www.is.gov/Form1099T Department of the Treasury - Internal Revenue Service Gordon College Statement of Account December 31, 2020 HARRIS FRANKLIN Student ID 604-00-XXXX Amount Billed +$3,750.00 Amount Paid -$1,025.00 Date Transaction 08/30/2020 Tuition - Fall Semester 2020 08/30/2020 Scholarship 09/03/2020 Parking pass 09/04/2020 Campus Bookstore charge to student account for course-related books 09/05/2020 Payment -check #1234 +$ 125.00 +$ 450.00 -$3,300.00 12/31/2020 Account Balance.... $0.00 Busy Bee Day Care 303 Twiggs Trail Your City, Your State Your Zip Ph: (555) 555-1234 December 31, 2020 Received from Harris and Carly Franklin: $1,500 for after-school care for Billy Franklin $750 for Cristina Franklin Total amount received for child care in 2020 $2,250.00 Ellen River EIN: 35-900XXXX