Instructions: Please complete the 2021 federal individual income tax return (Form 1040, Schedule 1 and Schedule A) for Bob and Melissa Grant. Stop after completing 1040 Line 16 (first line item on the second page of Form 1040) for this project. Submit and check your answers on D2L>Quizzes>Individual Tax Return. Bob and Melissa Grant are married and live in Lexington, Kentucky. The Grants would like to file a joint tax return for the year. They have 19-year-old twin-daughters who still qualify as their dependents on the tax return. Bob Grant received the following during the year: Employer Gross Wages Federal Income Tax Withholding State Income Tax Withholding University of Kentucky $117,450 $22,000 $6,000 Melissa Grant received the following during the year: Employer Gross Wages Federal Income Tax Withholding State Income Tax Withholding Jensen Photography $20,500 $2,450 $1,025 All applicable and appropriate payroll taxes were withheld by Grants respective employers. The Grants also received the following during the year: Interest Income from First Kentucky Bank $580 Interest Income from City of Lexington, KY Bond $600 Interest Income from U.S. Treasury Bond $825 Disability insurance payments received by Bob on account of injury 3,000 Bobs employer paid for the insurance policy issued by Aflac (NYSE AFL) as part of the tax-free fringe benefits Payment to Melissa as a result of a lawsuit for damages she sustained in a car accident: Reimbursement for her medical Expenses $14,500 Punitive Damages $10,000 Eight years ago, Melissa purchased an annuity contract for $80,000. This year, she received her first payment on the annuity. The payment amount was $16,000. The annuity started to pay on January 1 and she received a full first years payment. It will pay her $16,000 per year for ten years beginning this year. In 2021, they also received $420 of Kentucky state income tax refund. They took itemized deduction in 2020 and the amount of their total itemized deduction in 2020 is $31,878. The total of their 2020 State and Local Taxes paid is $9,100. 1 The Grants also placed $455 in the Kentucky Derby and won $3,225 from their tickets. The Grants paid or incurred the following expenses during the year: Dental/Orthdontist (not paid by insurance) $ 23,000 Medical visits (not paid by insurance) 625 Prescriptions (not paid by insurance) 380 Real property taxes on residence 1,800 Mortgage interest on principal residence 8,560 Contribution to First Baptist Church of Kentucky (Qualified Charity) 7,000 Fee paid to Jones & Company, CPAs for tax preparation 200 In addition, Melissa paid $2,500 of interest on her student loan. During the year, the Grants personal belongings were damaged by a federally declared disaster in September of the current year. All the items are considered damaged in one event. Item Purchase Date Decline in FMV Tax Basis of Item Insurance Reimbursement Received Laptop computer and Printer 09/01/2013 3,000 3,000 500 Rifle 03/01/2010 12,000 12,500 500 TV/Projector 03/01/2019 5,000 13,000 1,000 2010 Honda Pilot 07/01/2016 4,000 6,500 500 The Grants do not want to contribute to the Presidential Election Campaign and do not have any virtual currency.

Keep the decimal when calculating Schedule A Line 3. Round up to the nearest dollar for Schedule-A Line 4.

Question 1 (1 point)

The filing status of the taxpayer is

Question 1 options:

	Single
	Married Filing Jointly
	Married Filing Separately
	Head of Household

Question 2 (1 point)

The number of dependents on the tax return is___

Question 2 options:

	0
	1
	2
	3
	4

Question 3 (2 points)

Form 1040 Line 1 ___ (W-2 Wages, enter without comma or $)

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Question 4 (2 points)

Tax-exempt interest on Line 2a ____

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Question 5 (2 points)

Taxable interest on Line 2b ___

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Question 6 (2 points)

Pensions and annuities (gross amount, Line 5a) _____

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Question 7 (2 points)

Pensions and annuities (Taxable amount, Line 5b) ______

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Question 8 (3 points)

Schedule 1 Line 1 (Taxable refunds) _____

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Question 9 (4 points)

How much of the AFLAC income is taxable as part of "Other income" on Schedule 1 (Line 8z)?

Question 9 options:

	0
	1000
	2000
	3000

Question 10 (4 points)

Schedule-1 (Line 9) Total other income __________

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Question 11 (2 points)

Adjusted Gross Income before Student Loan Interest Deduction (Form 1040, Line #9) _____

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Question 12 (2 points)

The phase-out percentage for the student loan interest deduction is

Question 12 options:

	20%
	40%
	60%
	80%
	100%

Question 13 (2 points)

Schedule 1 Line 21 Student loan interest deduction ____. This number also applies to Form 1040, Line 10.

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Question 14 (2 points)

2021 Form 1040 Line 11 (Adjusted Gross Income)

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Question 15 (2 points)

Schedule-A Itemized Deductions Line 4 (Medical and Dental Expenses)

(Keep two decimals when calculating 7.5% of AGI

Round-up to the next dollar for Line 4)

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Question 16 (2 points)

Schedule A Line 7 (Taxes You Paid)

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Question 17 (2 points)

Schedule A Line 10 (Interest You Paid)

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Question 18 (2 points)

Schedule A Line 14 (Gifts to Charity)

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Question 19 (3 points)

Schedule A, Line 15 Casualty and Theft Losses (All items are considered one event) ______

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Question 20 (3 points)

Schedule-A Line 16 (Other Itemized Deductions)

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Question 21 (1 point)

2021 Form 1040 Line 12a (total Standard deduction or itemized deductions)

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Question 22 (2 points)

2021 Form 1040 Line 15 (Taxable income)

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Question 23 (2 points)

2021 Form 1040 Line 16 (Income tax liability)

Round-up to the next dollar (do not put in $ sign)

Question 23 options:

Do not include $ or , when entering the numbers.