Hannah Miller has engaged Cameron Jones, the owner of a small CPA firm, to prepare her and her husband Arthurs 2019 Form 1040, U.S. Individual Income Tax Return. As part of the engagement, Cameron explains how certain situations and tax laws affect his clients tax returns. Cameron has asked you to review the documentation and revise the letter to Mrs. Miller, correcting any errors.

To revise the document, click on each segment of underlined text below and select the needed correction, if any, from the list provided. If the underlined text is already correct in the context of the document, select [Original Text] from the list. If removal of the underlined text is the best revision to the document, select [Delete Text] from the list if available.

Cameron Jones, CPA 5200 NW 43rd Street Suite 403 Hartford, CT 06120

January 20, 2020

To: Hannah Miller From: Cameron Jones, CPA Re: Standard/Itemized Deductions

Good afternoon Mrs. Miller,

My holidays were great this year. Hopefully this response can answer all of your questions so you can get your return filed early.

You are correct that we talked about Arthurs 65th birthday affecting the standard deduction. If you were to file married filing jointly:

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a) your standard deduction amount would be $24,400.

b) your standard deduction amount would be $25,700.

c) your standard deduction amount would be $27,000.

d) your standard deduction amount would be $18,350.

e) your standard deduction amount would be $13,850.

Arthurs hip replacement surgery qualifies as an itemized deduction. Necessary medical expenses are deductible if they exceed a certain percentage of AGI. Thus,:

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a) Thus, using the 10%-of-AGI floor, $2,729 is deductible as an itemized deduction.

b) Thus, using the 10%-of-AGI floor, $6,352 is deductible as an itemized deduction.

c) Thus, using the 7.5%-of-AGI floor, $4,317 is deductible as an itemized deduction.

d) Thus, using the 10%-of-AGI floor, $2,545 is deductible as an itemized deduction.

e )Thus, $8,897 is deductible as an itemized deduction.

Your donation to the Ronald McDonald House can:

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a) can also be deducted as an itemized deduction. You would be able to deduct $1,270 of your donation.

b) can also be deducted as an itemized deduction. You would be able to deduct $1,230 of your donation.

c) can also be deducted as an itemized deduction. You would be able to deduct $1,500 of your donation.

d) can also be deducted as an itemized deduction. You would be able to deduct the full $2,500 of your donation.

e) cannot be deducted as an itemized deduction. You would not be able to deduct any of your donation.

Lastly,:

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a) you may deduct all $425 of your expenses for your classroom as an itemized deduction.

b) you may deduct $250 of your expenses for your classroom as an itemized deduction.

c) you may deduct all $425 of your expenses for your classroom as an above-the-line deduction.

d) you may deduct $250 of your expenses for your classroom as an above-the-line deduction.

Please let me know if you have any further questions regarding your Form 1040.

Best Regards,

Cameron Jones, CPA

Exhibits:

Taxpayer's Email:

January 12, 2020

To: Cameron Jones

From: Hannah Miller

Re: Standard/Itemized Deductions

Dear Mr. Jones,

I hope the holidays treated you well and that you are having a great new year. I just have a few questions for you because Arthur and I are currently filling out our federal tax return. We have determined our AGI to be $63,520.

We are trying to decide if we should take the standard deduction or itemize our deductions this year. We celebrated Arthurs 65th birthday in November! If I remember correctly, you told us last year that there will be an additional standard deduction once either of us reaches the age of 65. What would our standard deduction be then if we file married filing jointly?

Arthur had to have a necessary hip replacement surgery in May. The hospital where Arthur had his surgery was located a few hours away. I have attached the invoice for the surgery for you to review. If we were to itemize our deductions instead of using the standard deduction, how much would we be able to deduct for the surgery? Would we also deduct our traveling expenses of $184.51?

As Im sure you remember, I like to make donations to the Ronald McDonald House at the end of the year. If we were to itemize our deductions, how much of my donation would I deduct this year? I have also attached my donation receipt for your review.

Lastly, I spent $425 on books and supplies for my second-grade classroom this year. The school did not reimburse me for these expenses. Am I allowed to take this expense as an itemized deduction?

We look forward to your response!

Sincerely,

Hannah Miller

Standard Deduction Tables: Read Only

Donation Receipt: (Read Only)

Medical Invoice:

INVOICE
Allied Family Physicians
591 N. Main Street #101	Date:	05/12/19
Hartford, CT 06120	Invoice #:	25698
Phone: (860) 555-0203	Customer ID:	9D45
Bill To:
Hannah & Arthur Miller
870 West Spring Drive
Hartford, CT 06120

PATIENT	DESCRIPTION	QTY	UNIT PRICE	TOTAL
Miller, Arthur	EST Hip Replacement Procedure	1	$4,000.00	$4,000.00
Miller, Arthur	CBC and Chemistry Profile	1	$162.36	$162.36
Miller, Arthur	Radiography 2 Views	1	$648.26	$648.26
Miller, Arthur	Radiology Interpretation	1	$86.54	$86.54
Miller, Arthur	Catheterization Intravenous	1	$94.00	$94.00
Miller, Arthur	Surgery Room Use	1	$215.00	$215.00
Miller, Arthur	Isoflurane Gas Anesthesia Initial	1	$119.25	$119.25
Miller, Arthur	Isoflurane Gas Anesthesia add. / minute	180	$6.25	$1,125.00
Miller, Arthur	Metal Cast Standard	1	$863.31	$863.31
Miller, Arthur	Surgical Anesthesia Level I	1	$145.62	$145.62
Miller, Arthur	Surgical Supplies	1	$252.11	$252.11
Miller, Arthur	Surgeons Fee	1	$620.27	$620.27
Miller, Arthur	Hospitalization General	1	$112.99	$112.99
Miller, Arthur	Misc. Medication Surgical	1	$400.00	$400.00
Miller, Arthur	Fentanyl 75mcg Patch	1	$51.78	$51.78
			TOTAL	$8,896.49
			All checks are payable to:
			Allied Family Physicians
	If you have any questions concerning this invoice, please contact Danielle Snyder (860) 555-8484
Thank you!

Table 21-1. Standard Deduction Chart for Most People IF your filing status is... THEN your standard deduction is... Single or Married filing separately $12,200 Married filing jointly or Qualifying widow(er) 24,400 Head of household 18,350 "Don't use this chart if you were born before January 2, 1955, are blind, or if someone else can claim you (or your spouse, if filing jointly) as a dependent. Use Table 21-2 or 21-3 instead. Table 21-2. Standard Deduction Chart for People Born Before January 2, 1955, or Who Are Blind Check the correct number of boxes below. Then go to the chart. You: Born before January 2, 1955 Blind 0 Your spouse: Born before January 2, 1955 Blind 0 Total number of boxes checked U AND THEN your filing status is... the number in the box above is... your standard deduction is... Single $13,850 15.500 Married filing jointly $25,700 27,000 28,300 29,600 Qualifying widow(er) $25,700 27,000 Married filing $13,500 separately 14,800 16,100 17,400 Head of household $20,000 21,650 "If someone else can claim you (or your spouse, if filing jointly) as a dependent, use Table 21-3 instead. "You can check the boxes for Your Spouse if your filing status is married filing separately and your spouse had no income, isn't filing a return, and can't be claimed as a dependent on another person's return. Table 21-3. Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Check the correct number of boxes below. Then go to the worksheet. You: Your spouse: Total number of boxes checked 1. Enter your earned income (defined below). If none, enter-O-. Born before January 2, 1955 Born before January 2, 1955 Blind Blind $350 2. 3. Additional amount Add lines 1 and 2. 4. Minimum standard deduction. $1,100 5. Enter the larger of line 3 or line 4. 6. Enter the amount shown below for your filing status. Single or Married filing separately- $12,200 Married filing jointly- $24.400 Head of household $18,350 7. Standard deduction. a. Enter the smaller of line 5 or line 6. If born after January 1, 1955, and not blind, stop here. This is your standard deduction. Otherwise, go on to line 7b. b. If born before January 2, 1955, or blind, multiply $1,650 ($1,300 if married) by the number in the box above. c. Add lines 7a and 7b. This is your standard deduction for 2019. 7b. Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any taxable scholarship or fellowship grant. DONATION RECEIPT Date: 12121119 Receipt #: 326 Donated By: Hannah Miller Street Address: 70 W. Spring Drive City: Hartford State: C CT Zip: 30 82.500 Amount received by Ronald McDonald House: Value of advantage: Eligible amount of gift for tax purposes: 2.500 RONALD MCDONALD HOUSE CHARITIES Description of donation: cash Authorized Senature Authorized Signature: Hephame they LANA Thank you for your generosity. We appreciate your support! Table 21-1. Standard Deduction Chart for Most People IF your filing status is... THEN your standard deduction is... Single or Married filing separately $12,200 Married filing jointly or Qualifying widow(er) 24,400 Head of household 18,350 "Don't use this chart if you were born before January 2, 1955, are blind, or if someone else can claim you (or your spouse, if filing jointly) as a dependent. Use Table 21-2 or 21-3 instead. Table 21-2. Standard Deduction Chart for People Born Before January 2, 1955, or Who Are Blind Check the correct number of boxes below. Then go to the chart. You: Born before January 2, 1955 Blind 0 Your spouse: Born before January 2, 1955 Blind 0 Total number of boxes checked U AND THEN your filing status is... the number in the box above is... your standard deduction is... Single $13,850 15.500 Married filing jointly $25,700 27,000 28,300 29,600 Qualifying widow(er) $25,700 27,000 Married filing $13,500 separately 14,800 16,100 17,400 Head of household $20,000 21,650 "If someone else can claim you (or your spouse, if filing jointly) as a dependent, use Table 21-3 instead. "You can check the boxes for Your Spouse if your filing status is married filing separately and your spouse had no income, isn't filing a return, and can't be claimed as a dependent on another person's return. Table 21-3. Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Check the correct number of boxes below. Then go to the worksheet. You: Your spouse: Total number of boxes checked 1. Enter your earned income (defined below). If none, enter-O-. Born before January 2, 1955 Born before January 2, 1955 Blind Blind $350 2. 3. Additional amount Add lines 1 and 2. 4. Minimum standard deduction. $1,100 5. Enter the larger of line 3 or line 4. 6. Enter the amount shown below for your filing status. Single or Married filing separately- $12,200 Married filing jointly- $24.400 Head of household $18,350 7. Standard deduction. a. Enter the smaller of line 5 or line 6. If born after January 1, 1955, and not blind, stop here. This is your standard deduction. Otherwise, go on to line 7b. b. If born before January 2, 1955, or blind, multiply $1,650 ($1,300 if married) by the number in the box above. c. Add lines 7a and 7b. This is your standard deduction for 2019. 7b. Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any taxable scholarship or fellowship grant. DONATION RECEIPT Date: 12121119 Receipt #: 326 Donated By: Hannah Miller Street Address: 70 W. Spring Drive City: Hartford State: C CT Zip: 30 82.500 Amount received by Ronald McDonald House: Value of advantage: Eligible amount of gift for tax purposes: 2.500 RONALD MCDONALD HOUSE CHARITIES Description of donation: cash Authorized Senature Authorized Signature: Hephame they LANA Thank you for your generosity. We appreciate your support