Instructions: Please complete the 2020 federal income tax return for Sarah Hamblin. Be sure to include only required tax forms when completing the tax return. For purposes of this assignment, unless instructed otherwise, you do not need to attach Form 8582. Also, ignore the requirement to attach the Form(s) W- 2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps. Sarah Hamblin and her now ex-husband Kevin were legally divorced on March 1, 2020. As of the end of the year, Sarah was unmarried. Sarah and Kevin had only one child, an 11-year-old girl named Elizabeth. As part of the divorce decree, Sarah was given custody of Elizabeth and Kevin was required to pay 1) child support for Elizabeths care, and 2) alimony to Sarah until she remarries or dies. Because Kevin will be making child support payments, the divorce decree provided that Kevin will be permitted to claim the tax dependency exemption for Elizabeth until Elizabeth no longer qualifies as a tax dependent of either parent and the decree obligates Sarah to sign and/or file any required forms to cause this result to occur.

Sarah rents a home (separate from Kevin) that she pays for herself. Elizabeth lives with Sarah most of the time, but she visits and stays with her father every other weekend and most holidays. During the year, Elizabeth stayed at Kevins house a total of 74 nights. Sarah provided the following information for 2020: Sarahs Social Security number is 123-43-4321 Elizabeths Social Security number is 123-34-1234 Sarahs mailing address is 1245 Rose Petal Drive, Middletown, Wisconsin 53562 Elizabeth is a U.S. citizen The following was reported on Sarahs Form W-2:

Sarah made a $200 donation to the American Red Cross in support of its COVID-19 relief efforts. Sarah is a 50% owner in a friends company, Bright Day Flowers, Inc. Bright Day Flowers, Inc. (BDF) is a Subchapter S corporation. The company reported ordinary business income for the year of $22,000. Sarah acquired the stock several years ago. Sarah worked a total of 600 hours at the BDF shop in the evenings and on the weekends during 2020. Bright Day Flowers, Inc.s employer identification number is 56-3535353. Sarah entered a contest sponsored by a radio station and won 10 gift cards to various restaurants. The value of the gift cards was $200 each. Sarah gave several of the gift cards away to her coworkers. Sarah lost her job with Central Wisconsin Heating and Air on November 15 because of a reduction in work force. She collected $1,250 in unemployment benefits during the year. She is currently looking for another job. Sarah had qualifying minimum health insurance coverage provided to her because of her employment with Central Wisconsin Heating and Air for each month in 2020 (the employer continued to cover her through the end of the year). Elizabeth had qualifying minimum health insurance coverage provided through Kevin through his work. Sarah did not own, control or manage any foreign bank accounts nor was she a grantor or beneficiary of a foreign trust during the tax year. Also, Sarah did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency. Sarah received two Economic Impact Payments (stimulus checks) in the full amount before filing their 2020 tax return. Sarah was provided with the following benefits as part of her employment:

Group-term life insurance coverage of $50,000. The cost to cover Sarah for the company for the tax year is $150. Access to the company photocopy machine. Sarah estimates she made $14 worth of copies during the year primarily for use with her church group activities. Sarah reported no itemized deductions other than any described above.

Sarah does not want to contribute to the Presidential Election Campaign Fund. She would like to receive a refund (if any) of any tax she may have overpaid for the year. Her preferred method of receiving the refund is by check.

\begin{tabular}{|c|c|c|c|} \hline Employer & Gross Wages & Federal Income Tax Withholding & State Income Tax Withholding \\ \hline Central Wisconsin Heating and Air & 34,350 & 6,950 & 2,125 \\ \hline \end{tabular} All applicable and appropriate payroll taxes were withheld by the employer. During the year, Sarah also received the following: Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 2a Alimony received. b Date of original divorce or separation agreement (see instructions) 3 Business income or (loss). Attach Schedule C . . . . . . . . . . . . . . . . 4 Other gains or (losses). Attach Form 4797 . 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 6 Farm income or (loss). Attach Schedule F 7 Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . 8 Other income: a Net operating loss b Gambling income c Cancellation of debt . d Foreign earned income exclusion from Form 2555 e Taxable Health Savings Account distribution f Alaska Permanent Fund dividends g Jury duty pay \begin{tabular}{|c|l} \hline 1 & \\ \hline 2a & \\ \hline \end{tabular} h Prizes and awards . . . . . . . . . . . . . . . . . . . i Activity not engaged in for profit income . . . . . . . . . . j Stock options k Income from the rental of personal property if you engaged in the rental for profit but were not in the business of renting such property I Olympic and Paralympic medals and USOC prize money (see instructions) . m Section 951(a) inclusion (see instructions) n Section 951A(a) inclusion (see instructions) o Section 461(l) excess business loss adjustment . p Taxable distributions from an ABLE account (see instructions). z Other income. List type and amount 9 Total other income. Add lines 8 a through 8z. . . . . . . . . . . . . . . . . . . 10 Combine lines 1 through 7 and 9. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8 \begin{tabular}{|l|l} 3 & \\ \hline 4 & \\ \hline & \\ \hline \end{tabular} \begin{tabular}{|l|l} \hline 5 & \\ \hline 6 & \\ \hline 7 & \\ \hline & \\ \hline \end{tabular} For Paperwork Reduction Act Notice, see your tax return instructions. \begin{tabular}{|c|c|} \hline 9 \\ \hline 10 & \\ \hline Schedule 1 (Form 1040) 2021 \\ \hline \end{tabular} Schedule 1 (Form 1040) 2021 Page 2 Part II Adjustments to Income 11 Educator expenses . 12 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 13 Health savings account deduction. Attach Form 8889 . 14 Moving expenses for members of the Armed Forces. Attach Form 3903 . . . . . 15 Deductible part of self-employment tax. Attach Schedule SE . . . . . . . . . 16 Self-employed SEP, SIMPLE, and qualified plans . 17 Self-employed health insurance deduction. 18 Penalty on early withdrawal of savings 19a Alimony paid. b Recipient's SSN c Date of original divorce or separation agreement (see instructions) 20 IRA deduction 21 Student loan interest deduction 11 22 Reserved for future use 23 Archer MSA deduction . . . . . . . . . . . . . . . . . . 24 Other adjustments: a Jury duty pay (see instructions) ................ b Deductible expenses related to income reported on line 8k from the rental of personal property engaged in for profit c Nontaxable amount of the value of Olympic and Paralympic medals and USOC prize money reported on line 8I d Reforestation amortization and expenses .... . . . . . . . e Repayment of supplemental unemployment benefits under the Trade Act of 1974 . f Contributions to section 501(c)(18)(D) pension plans g Contributions by certain chaplains to section 403(b) plans . . 24g h Attomey fees and court costs for actions involving certain unlawful discrimination claims (see instructions) ....... 24h i Attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations j Housing deduction from Form 2555 \begin{tabular}{|c|} \hline 12 \\ \hline 13 \\ \hline 14 \\ \hline 15 \\ \hline 16 \\ \hline 17 \\ \hline 18 \\ \hline 19a \\ \hline \end{tabular} k Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041). z Other adjustments. List type and amount \begin{tabular}{l|l} (Rev. December 2021) & Child Tax Credit (CTC) (including the Additional Child Tax Credit (ACTC) and Credit for Other Dependents (ODC)), and Head of Household (HOH) Filing Status \\ Department of the Treasury Internal Revenue Service & To be completed by preparer and filed with Form 1040, 1040-SR, 1040-NR, 1040-PR, or 1040-SS. \\ \hline Taxpayer name(s) shown on return \\ \hline \end{tabular} Enter preparer's name and PTIN Part I Due Diligence Requirements Please check the appropriate box for the credit(s) and/or HOH filing status claimed on the return and complete for the benefit(s) claimed (check all that apply). EIC CTC/ACTC/ODC 1 Did you complete the return based on information for the applicable tax year provided by the taxpayer or reasonably obtained by you? (See instructions if relying on prior year earned income.) 2 If credits are claimed on the return, did you complete the applicable EIC and/or CTC/ACTC/ODC worksheets found in the Form 1040, 1040-SR, 1040-NR, 1040-PR, 1040-SS, or Schedule 8812 (Form 1040) instructions, and/or the AOTC worksheet found in the Form 8863 instructions, or your own worksheet(s) that provides the same information, and all related forms and schedules for each credit claimed? 3 Did you satisfy the knowledge requirement? To meet the knowledge requirement, you must do both of the following. - Interview the taxpayer, ask questions, and contemporaneously document the taxpayer's responses to determine that the taxpayer is eligible to claim the credit(s) and/or HOH filing status. - Review information to determine that the taxpayer is eligible to claim the credit(s) and/or HOH filing status and to figure the amount(s) of any credit(s) . 4 Did any information provided by the taxpayer or a third party for use in preparing the return, or information reasonably known to you, appear to be incorrect, incomplete, or inconsistent? (If "Yes," answer questions 4a and 4b. If "No," go to question 5.) . a Did you make reasonable inquiries to determine the correct, complete, and consistent information? . b Did you contemporaneously document your inquiries? (Documentation should include the questions you asked, whom you asked, when you asked, the information that was provided, and the impact the information had on your preparation of the return.) . . . . . . . . . . . . . . . . . . . . . . . . 5 Did you satisfy the record retention requirement? To meet the record retention requirement, you must keep a copy of your documentation referenced in question 4b, a copy of this Form 8867, a copy of any applicable worksheet(s), a record of how, when, and from whom the information used to prepare Form 8867 and any applicable worksheet(s) was obtained, and a copy of any document(s) provided by the taxpayer that you relied on to determine eligibility for the credit(s) and/or HOH filing status or to figure List those documents provided by the taxpayer, if any, that you relied on: 6 Did you ask the taxpayer whether he/she could provide documentation to substantiate eligibility for the credit(s) and/or HOH filing status and the amount(s) of any credit(s) claimed on the return if his/her return is selected for audit? . 7 Did you ask the taxpayer if any of these credits were disallowed or reduced in a previous year? . . (If credits were disallowed or reduced, go to question 7 a; if not, go to question 8.) a Did you complete the required recertification Form 8862? . 8 If the taxpayer is reporting self-employment income, did you ask questions to prepare a complete and correct Schedule C (Form 1040)? . For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 26142H \begin{tabular}{|c|c|c|c|} \hline Employer & Gross Wages & Federal Income Tax Withholding & State Income Tax Withholding \\ \hline Central Wisconsin Heating and Air & 34,350 & 6,950 & 2,125 \\ \hline \end{tabular} All applicable and appropriate payroll taxes were withheld by the employer. During the year, Sarah also received the following: Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 2a Alimony received. b Date of original divorce or separation agreement (see instructions) 3 Business income or (loss). Attach Schedule C . . . . . . . . . . . . . . . . 4 Other gains or (losses). Attach Form 4797 . 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 6 Farm income or (loss). Attach Schedule F 7 Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . 8 Other income: a Net operating loss b Gambling income c Cancellation of debt . d Foreign earned income exclusion from Form 2555 e Taxable Health Savings Account distribution f Alaska Permanent Fund dividends g Jury duty pay \begin{tabular}{|c|l} \hline 1 & \\ \hline 2a & \\ \hline \end{tabular} h Prizes and awards . . . . . . . . . . . . . . . . . . . i Activity not engaged in for profit income . . . . . . . . . . j Stock options k Income from the rental of personal property if you engaged in the rental for profit but were not in the business of renting such property I Olympic and Paralympic medals and USOC prize money (see instructions) . m Section 951(a) inclusion (see instructions) n Section 951A(a) inclusion (see instructions) o Section 461(l) excess business loss adjustment . p Taxable distributions from an ABLE account (see instructions). z Other income. List type and amount 9 Total other income. Add lines 8 a through 8z. . . . . . . . . . . . . . . . . . . 10 Combine lines 1 through 7 and 9. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8 \begin{tabular}{|l|l} 3 & \\ \hline 4 & \\ \hline & \\ \hline \end{tabular} \begin{tabular}{|l|l} \hline 5 & \\ \hline 6 & \\ \hline 7 & \\ \hline & \\ \hline \end{tabular} For Paperwork Reduction Act Notice, see your tax return instructions. \begin{tabular}{|c|c|} \hline 9 \\ \hline 10 & \\ \hline Schedule 1 (Form 1040) 2021 \\ \hline \end{tabular} Schedule 1 (Form 1040) 2021 Page 2 Part II Adjustments to Income 11 Educator expenses . 12 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 13 Health savings account deduction. Attach Form 8889 . 14 Moving expenses for members of the Armed Forces. Attach Form 3903 . . . . . 15 Deductible part of self-employment tax. Attach Schedule SE . . . . . . . . . 16 Self-employed SEP, SIMPLE, and qualified plans . 17 Self-employed health insurance deduction. 18 Penalty on early withdrawal of savings 19a Alimony paid. b Recipient's SSN c Date of original divorce or separation agreement (see instructions) 20 IRA deduction 21 Student loan interest deduction 11 22 Reserved for future use 23 Archer MSA deduction . . . . . . . . . . . . . . . . . . 24 Other adjustments: a Jury duty pay (see instructions) ................ b Deductible expenses related to income reported on line 8k from the rental of personal property engaged in for profit c Nontaxable amount of the value of Olympic and Paralympic medals and USOC prize money reported on line 8I d Reforestation amortization and expenses .... . . . . . . . e Repayment of supplemental unemployment benefits under the Trade Act of 1974 . f Contributions to section 501(c)(18)(D) pension plans g Contributions by certain chaplains to section 403(b) plans . . 24g h Attomey fees and court costs for actions involving certain unlawful discrimination claims (see instructions) ....... 24h i Attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations j Housing deduction from Form 2555 \begin{tabular}{|c|} \hline 12 \\ \hline 13 \\ \hline 14 \\ \hline 15 \\ \hline 16 \\ \hline 17 \\ \hline 18 \\ \hline 19a \\ \hline \end{tabular} k Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041). z Other adjustments. List type and amount \begin{tabular}{l|l} (Rev. December 2021) & Child Tax Credit (CTC) (including the Additional Child Tax Credit (ACTC) and Credit for Other Dependents (ODC)), and Head of Household (HOH) Filing Status \\ Department of the Treasury Internal Revenue Service & To be completed by preparer and filed with Form 1040, 1040-SR, 1040-NR, 1040-PR, or 1040-SS. \\ \hline Taxpayer name(s) shown on return \\ \hline \end{tabular} Enter preparer's name and PTIN Part I Due Diligence Requirements Please check the appropriate box for the credit(s) and/or HOH filing status claimed on the return and complete for the benefit(s) claimed (check all that apply). EIC CTC/ACTC/ODC 1 Did you complete the return based on information for the applicable tax year provided by the taxpayer or reasonably obtained by you? (See instructions if relying on prior year earned income.) 2 If credits are claimed on the return, did you complete the applicable EIC and/or CTC/ACTC/ODC worksheets found in the Form 1040, 1040-SR, 1040-NR, 1040-PR, 1040-SS, or Schedule 8812 (Form 1040) instructions, and/or the AOTC worksheet found in the Form 8863 instructions, or your own worksheet(s) that provides the same information, and all related forms and schedules for each credit claimed? 3 Did you satisfy the knowledge requirement? To meet the knowledge requirement, you must do both of the following. - Interview the taxpayer, ask questions, and contemporaneously document the taxpayer's responses to determine that the taxpayer is eligible to claim the credit(s) and/or HOH filing status. - Review information to determine that the taxpayer is eligible to claim the credit(s) and/or HOH filing status and to figure the amount(s) of any credit(s) . 4 Did any information provided by the taxpayer or a third party for use in preparing the return, or information reasonably known to you, appear to be incorrect, incomplete, or inconsistent? (If "Yes," answer questions 4a and 4b. If "No," go to question 5.) . a Did you make reasonable inquiries to determine the correct, complete, and consistent information? . b Did you contemporaneously document your inquiries? (Documentation should include the questions you asked, whom you asked, when you asked, the information that was provided, and the impact the information had on your preparation of the return.) . . . . . . . . . . . . . . . . . . . . . . . . 5 Did you satisfy the record retention requirement? To meet the record retention requirement, you must keep a copy of your documentation referenced in question 4b, a copy of this Form 8867, a copy of any applicable worksheet(s), a record of how, when, and from whom the information used to prepare Form 8867 and any applicable worksheet(s) was obtained, and a copy of any document(s) provided by the taxpayer that you relied on to determine eligibility for the credit(s) and/or HOH filing status or to figure List those documents provided by the taxpayer, if any, that you relied on: 6 Did you ask the taxpayer whether he/she could provide documentation to substantiate eligibility for the credit(s) and/or HOH filing status and the amount(s) of any credit(s) claimed on the return if his/her return is selected for audit? . 7 Did you ask the taxpayer if any of these credits were disallowed or reduced in a previous year? . . (If credits were disallowed or reduced, go to question 7 a; if not, go to question 8.) a Did you complete the required recertification Form 8862? . 8 If the taxpayer is reporting self-employment income, did you ask questions to prepare a complete and correct Schedule C (Form 1040)? . For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 26142H