help on filling 1040 form
9. In March 2018, the Pennsylvania Department of Revenue audited Samantha's state income tax returns for 2015 and 2016. She was assessed additional state income tax of $340 for these years. No interest was included in the assessment. Samantha paid the back taxes in early April 10. On a morning walk in November 2014, Samantha was injured when she was side- swiped by a delivery truck. Samantha was hospitalized for several days, and the driver of the truck was ticketed and charged with DUI. The owner of the truck, a national parcel delivery service, was concerned that further adverse publicity might result if the matter went to court. Consequently, the owner offered Saman- tha a settlement if she would sign a release. Under the settlement, her medical E- APPENDIX E Practice Set Assignments - Comprehensive Tax Return Problems expenses were paid and she would receive a cash award of $200,000. The award specified that the entire amount was for the physical pain she suffered as a result of the accident. Since she suffered no permanent injury, Samantha signed the release in April 2018 and received the $200,000 settlement late that summer. 11. In January 2018, Samantha was contacted by the state of Pennsylvania regarding a tract of land she owned in York County. The state intended to convert the property into a district headquarters, barracks and training center for its highway patrol Samantha had inherited the property from her father when he died on August 11, 2017. The property had a value of $140,000 on that date and had been purchased by her father on March 3, 1980, for $30,000. On July 25, 2018, after considerable discussions including the states threat to initiate condemnation proceedings, she sold the tract to the state for $158,000. This transaction was not reported on a For 1099-B. Since Samantha is not comfortable with real estate investments, she does not plan to reinvest any of the proceeds in another piece of realty 12. When her father died, Samantha did not know that he had an insurance policy on his life maturity value of $50,000) in which she was named the beneficiary When her mother told her about the policy in July 2018, Samantha filed a claim with the carrier, Falcon Life Insurance Company. In November 2018, she received a check from Falcon for $51,500 which included $1.500 interest 13. Upon the advice of a client who is a respected broker, Samantha purchased 1.000 shares of common stock in Grosbeak Exploration for $40,000 on March 4, 2018 In the months following her purchase the share value of Grosbeak plummeted. Disgusted with the unexpected erosion in the value of her investment, Samantha sold the stock for $28.000 on December 23, 2018. This transaction was reported on Form 1099-B with Samantha's basis correctly reported to the IRS. While on her way to work in 2017, Samantha was rear-ended by a hit-and-run driver. Thankfully, she was not injured in the accident. The damage to her Lexus was cowered by her insurance company, General Casualty, except for the $1.000 deductible she was required to pay. In 2018, the insurance company located the driver who caused the accident and was reimbursed by his insurer. Consequently Samantha received a $1,000 refund check from General Casualty in May 2018 to reimburse her $1,000 deductible. 15. After her father's death, Samantha's mother (Mildred Cranston, Social Security num- ber 123-51-3789) moved in with her. Mildred's persistent back trouble made it dif ficult for her to climb the stairs to the second floor bedrooms in Samantha's house So, Samantha had an elevator installed in her personal residence at a cost of $12.000 in January 2018. A qualified appraiser determined that the elevator increased the value of the personal residence by $5,000. The appraisal cost $400. The operation of the elevator during 2018 increased Samantha's electric bill by $300. 16. As a favor to a long-time client who is a drama professor at a local state university, Samantha spent a weekend as a stylist for the principal actresses in the annual Theater Department fund-raising event. The drama professor provided all of the resources that Samantha needed to provide her services. Samantha estimates that she would have charged $800 for the services she donated to this charitable event 17. In addition to the items already noted, Samantha had the following receipts dur- ing 2018 $900 490 340 $1,730 Interest income CD at Scranton First National Bank City of Lancaster general purpose bonds Money market account at Allentown State Bank Qualified dividends on stock investments- General Electric AT&T common Federal income tax refund for tax year 2017 Pennsylvania state income tax refund for tax year 2017 5470 380 850 791 205 APPENDIX E Practice Set Assignments-Comprehensive Tax Return Problems 18. In addition to the items already noted, Samantha had the following expenditures for 2018: $10,000 $4,800 1,400 Contribution to pension plan Medical Premiums on medical insurance Dental bills Property taxes on personal residence Interest on home mortgage Cash donations to qualified charities Professional expenses- Subscriptions to trade journals Dues to beautician groups 6,200 5,500 3,200 4,500 $ 180 140 320 The $10,000 contribution to the pension plan is to a $ 401(k) type of plan she established in 2018. Previously, she had contributed to an H.R. 10 (Keogh) plan but found that the $ 401(k) retirement arrangement provides more flexibility and is less complex. The medical insurance policy covers Samantha and her depen- dent mom and was issued in the name of the business (i.e., Turning Heads). It does not cover dental work or capital modifications to a residence (see item 15 above). 19. During 2018, Samantha made total estimated tax payments with respect to her 2018 tax returns as follows: Federal estimated income tax payments Pennsylvania estimated income tax payments Allentown City estimated income tax payments $16,000 4,800 800 Yo social secur Medical and Dental Expenses Taxes You Paid Caution: Do not include expenses reimbursed or paid by others. 1 Medical and dental expenses (see instructions) 2 Enter amount from Form 1040, line 7 2 3 Multiply line 2 by 7.5% (0.075) 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter-0- 5 State and local taxes. a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box b State and local real estate taxes (see instructions) c State and local personal property taxes d Add lines 5a through 5c. . e Enter the smaller of line 5d or $10,000 $5,000 t married ing separately) . 6 Other taxes. List type and amount 7 Add lines 5e and 6 . . Interest You 8 Home mortgage interest and points. If you didn't use all of your Paid home mortgage loans) to buy, build, or improve your home, Caution: Your see instructions and check this box.... mortgage interest deduction may be a Home mortgage interest and points reported to you on Form a ctions 1098. See Instructions it limited. . . . . . - - - b Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no, and address Points not reported to you on Form 1098. See instructions special rules. . . . . . d Mortgage Insurance premiums (see instructions e Add lines Ba through 8d. - - - - - 9 Investment interest. Attach Form 4952 # required. See instructions 10 Add lines Be and 9 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more Charity see instructions - 12 Other than by cash or check. If any gift of $250 or more, see and get a instructions. You must attach Form 8283 it over $500. . benetton 13 Carryover from prior year 14 Add lines 11 through 13 Casualty and 15 Casualty and the losses from a federally declared disaster other than net qualified Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See Instructions Other 16 Other-from list in instructions. List type and amount Herized Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also enter this amount on itemized Form 1040, line 8 Deductions 18 If you clect to itemize deductions even though they are less than your standard deduction, check here For Paperwork Reduction Act Notices the Instructions for Form 1040. 17! Schedule A Form 1049 2018 9. In March 2018, the Pennsylvania Department of Revenue audited Samantha's state income tax returns for 2015 and 2016. She was assessed additional state income tax of $340 for these years. No interest was included in the assessment. Samantha paid the back taxes in early April 10. On a morning walk in November 2014, Samantha was injured when she was side- swiped by a delivery truck. Samantha was hospitalized for several days, and the driver of the truck was ticketed and charged with DUI. The owner of the truck, a national parcel delivery service, was concerned that further adverse publicity might result if the matter went to court. Consequently, the owner offered Saman- tha a settlement if she would sign a release. Under the settlement, her medical E- APPENDIX E Practice Set Assignments - Comprehensive Tax Return Problems expenses were paid and she would receive a cash award of $200,000. The award specified that the entire amount was for the physical pain she suffered as a result of the accident. Since she suffered no permanent injury, Samantha signed the release in April 2018 and received the $200,000 settlement late that summer. 11. In January 2018, Samantha was contacted by the state of Pennsylvania regarding a tract of land she owned in York County. The state intended to convert the property into a district headquarters, barracks and training center for its highway patrol Samantha had inherited the property from her father when he died on August 11, 2017. The property had a value of $140,000 on that date and had been purchased by her father on March 3, 1980, for $30,000. On July 25, 2018, after considerable discussions including the states threat to initiate condemnation proceedings, she sold the tract to the state for $158,000. This transaction was not reported on a For 1099-B. Since Samantha is not comfortable with real estate investments, she does not plan to reinvest any of the proceeds in another piece of realty 12. When her father died, Samantha did not know that he had an insurance policy on his life maturity value of $50,000) in which she was named the beneficiary When her mother told her about the policy in July 2018, Samantha filed a claim with the carrier, Falcon Life Insurance Company. In November 2018, she received a check from Falcon for $51,500 which included $1.500 interest 13. Upon the advice of a client who is a respected broker, Samantha purchased 1.000 shares of common stock in Grosbeak Exploration for $40,000 on March 4, 2018 In the months following her purchase the share value of Grosbeak plummeted. Disgusted with the unexpected erosion in the value of her investment, Samantha sold the stock for $28.000 on December 23, 2018. This transaction was reported on Form 1099-B with Samantha's basis correctly reported to the IRS. While on her way to work in 2017, Samantha was rear-ended by a hit-and-run driver. Thankfully, she was not injured in the accident. The damage to her Lexus was cowered by her insurance company, General Casualty, except for the $1.000 deductible she was required to pay. In 2018, the insurance company located the driver who caused the accident and was reimbursed by his insurer. Consequently Samantha received a $1,000 refund check from General Casualty in May 2018 to reimburse her $1,000 deductible. 15. After her father's death, Samantha's mother (Mildred Cranston, Social Security num- ber 123-51-3789) moved in with her. Mildred's persistent back trouble made it dif ficult for her to climb the stairs to the second floor bedrooms in Samantha's house So, Samantha had an elevator installed in her personal residence at a cost of $12.000 in January 2018. A qualified appraiser determined that the elevator increased the value of the personal residence by $5,000. The appraisal cost $400. The operation of the elevator during 2018 increased Samantha's electric bill by $300. 16. As a favor to a long-time client who is a drama professor at a local state university, Samantha spent a weekend as a stylist for the principal actresses in the annual Theater Department fund-raising event. The drama professor provided all of the resources that Samantha needed to provide her services. Samantha estimates that she would have charged $800 for the services she donated to this charitable event 17. In addition to the items already noted, Samantha had the following receipts dur- ing 2018 $900 490 340 $1,730 Interest income CD at Scranton First National Bank City of Lancaster general purpose bonds Money market account at Allentown State Bank Qualified dividends on stock investments- General Electric AT&T common Federal income tax refund for tax year 2017 Pennsylvania state income tax refund for tax year 2017 5470 380 850 791 205 APPENDIX E Practice Set Assignments-Comprehensive Tax Return Problems 18. In addition to the items already noted, Samantha had the following expenditures for 2018: $10,000 $4,800 1,400 Contribution to pension plan Medical Premiums on medical insurance Dental bills Property taxes on personal residence Interest on home mortgage Cash donations to qualified charities Professional expenses- Subscriptions to trade journals Dues to beautician groups 6,200 5,500 3,200 4,500 $ 180 140 320 The $10,000 contribution to the pension plan is to a $ 401(k) type of plan she established in 2018. Previously, she had contributed to an H.R. 10 (Keogh) plan but found that the $ 401(k) retirement arrangement provides more flexibility and is less complex. The medical insurance policy covers Samantha and her depen- dent mom and was issued in the name of the business (i.e., Turning Heads). It does not cover dental work or capital modifications to a residence (see item 15 above). 19. During 2018, Samantha made total estimated tax payments with respect to her 2018 tax returns as follows: Federal estimated income tax payments Pennsylvania estimated income tax payments Allentown City estimated income tax payments $16,000 4,800 800 Yo social secur Medical and Dental Expenses Taxes You Paid Caution: Do not include expenses reimbursed or paid by others. 1 Medical and dental expenses (see instructions) 2 Enter amount from Form 1040, line 7 2 3 Multiply line 2 by 7.5% (0.075) 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter-0- 5 State and local taxes. a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box b State and local real estate taxes (see instructions) c State and local personal property taxes d Add lines 5a through 5c. . e Enter the smaller of line 5d or $10,000 $5,000 t married ing separately) . 6 Other taxes. List type and amount 7 Add lines 5e and 6 . . Interest You 8 Home mortgage interest and points. If you didn't use all of your Paid home mortgage loans) to buy, build, or improve your home, Caution: Your see instructions and check this box.... mortgage interest deduction may be a Home mortgage interest and points reported to you on Form a ctions 1098. See Instructions it limited. . . . . . - - - b Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no, and address Points not reported to you on Form 1098. See instructions special rules. . . . . . d Mortgage Insurance premiums (see instructions e Add lines Ba through 8d. - - - - - 9 Investment interest. Attach Form 4952 # required. See instructions 10 Add lines Be and 9 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more Charity see instructions - 12 Other than by cash or check. If any gift of $250 or more, see and get a instructions. You must attach Form 8283 it over $500. . benetton 13 Carryover from prior year 14 Add lines 11 through 13 Casualty and 15 Casualty and the losses from a federally declared disaster other than net qualified Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See Instructions Other 16 Other-from list in instructions. List type and amount Herized Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also enter this amount on itemized Form 1040, line 8 Deductions 18 If you clect to itemize deductions even though they are less than your standard deduction, check here For Paperwork Reduction Act Notices the Instructions for Form 1040. 17! Schedule A Form 1049 2018
