INDIVIDUAL INCOME TAX PROJECT

Facts:

Bob and Katie, ages 65 and 42, are married.

Occupation

Bob is a self-employed CPA. Please see below for details.

Katie works part time as a nurse and earned $25,600 in the past year.

Katie also makes jewelry in her spare time for fun. Last year, she sold only 2 necklaces for a total

of $450, but her expenses totaled $1,000.

Possible Dependents

Bob has two children from a previous marriage who are 26 and 32 years old.

Bob and Katie have four children together, ages 22, 19, 12 and 6.

Bob and Katie provide more than half of the support for all of the children with the exception

of Bobs 26 year old.

The 32 year-old moved back into Bobs home after returning from Bali in 2014. He currently

earns $3,900 / year as a yoga instructor.

The 26 year-old lives with his girlfriend who has a large trust fund. He earned $2,400 in the

past year as a freelance photographer.

The 22 year-old is a full time student who earns $10,600 / year working for her college. Bob

and Katie paid for her tuition for her first year of law school of $20,000.

The 19 year-old is an aspiring artist who earns $20,000 / year working at a local art gallery.

Bob and Katie also provide over half of the support for Bobs mother and Katies father.

Bobs mother, who is 92, lives in Florida. She has no income.

Katies father, who is 72, lives with Bob and Katie and earns $5,400 as an adjunct professor.

Bob pays alimony to his ex-wife of $150 / month for a total of $1,800.

Katie is still paying off her student loans. She pays interest of $300 / month for a total of $3,600.

Bob and Katie recently purchased a new home. They pay mortgage interest of $17,500 / year.

Real estate taxes are $3,700 / year. Excise tax for the cars and boat totaled $1,200.

Katie calculated all of her co-pays, prescriptions and doctors bills to be $8,050.

Bob and Katie contributed $100 cash to the Multiple Sclerosis Foundation last year. They also

donated $150 in clothing to Salvation Army.

Bob is a self-employed CPA had the following income and expenses from his firm:

Revenues from CPA Practice - $135,000

Expenses:

Car Mileage - $2,500

Business Insurance - $4,000

Office Expense - $6,000

Rent - $12,000

Travel Expense - $1,800

Meals and Entertainment - $4,500

Utilities - $2,000

Wages of Administrative Assistant - $35,000

1. Please fill out a 2020 Form 1040 and supporting schedules