Individual Return (Linda and Kyle Smith) Linda and Kyle Smith are married taxpayers who file a joint return. Their social security numbers are 123-45-6789 and 111-11-1111, respectively. Linda's birthday is September 21, 1977, and Kyle's is June 27, 1967. They live at 473 Revere Avenue, Lowell, MA 01850. Linda is the office manager for Lowell Dental Clinic. Kyle is the self-employed physical therapist. The following information is shown on Linda's Wage and Tax Statement (Form W-2) for the tax year Line Description Wage, tips, other compensation Linda 1. $58,000 2. Federal income tax withheld 6,960 4. Social security tax withheld 3,596 6. Medicare tax withheld 841 17. State income tax withheld 2,610 During the year, Kyle recorded the following items of his business: Revenue from patient visits $270,000 Property tax on the office 4,500 Mortgage interest on the office 12,000 The Smiths furnished 60% of the total support of Kyle's widower father, Paul Smith (born March 6, 1939, social security number 123-45-6777). Paul died in November 2020, and Kyle, the beneficiary of a policy on Paul's life, received life insurance proceeds of $800,000 on January 28, 2021. The Smiths also made some investment activities. The following information is shown their investment income/(loss): Interest income from saving account A gain from selling Netflix stock (hold for 7 months) $200 5,000 A loss from selling Bank of America stock (hold for 15 months) (1,500) An non-business bad debt (hint: tax treatment as short-term capital loss) (2,000) The Smiths had the following expenses relating to their personal residence during the tax year Property Taxes Qualified interest on home mortgage Unreimbursed Medical expenses paid: Medical expenses Doctor bill Operation Hospital expenses Interest payment on car loan Utilities $5,000 $8,800 $4,500 7,600 8,500 3,500 1,500 4,100 600 450 Depreciation on the office Malpractice insurance Utilities paid for the office Office staff salaries Rent payments on equipment health insurance premium paid for himself and his dependents health insurance premium paid for his employees 5,500 37,500 13,750 51,000 15,000 2,500 5,000 Kyle made the estimate Federal income tax payment totaled $28,000. He also made the estimate state income tax payment of $3,500 during the tax year. The Smiths provide over half of the support of their two children, Abby (born January 25, 1995, Social security number 123-45-6788) and Michael (born February 7, 2001, Social Security number 123-45-6786). Both children are full-time students and live with the Smiths except when they are away at college. Abby earned $4,500 from a summer internship, and Michael earned $3,800 from a part-time job. Union dues paid by Linda Linda's work uniform expenses Prepare the Federal income tax return of 2021 for the Smiths. You will include Form 1040, Schedule 1, Schedule C-only page 1, and Schedule A, Schedule SE-only page 1 Check your figures: Kyle's net business income (Sch. C) $125750 Adjusted Gross income is $174066 Itemized deductions: 29845 Qualified business income deduction: 22873 Taxable income: 121348 They owe $501 (you may have a few dollars difference due to the rounding)