John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2021, John worked as a computer technician at a local university earning a salary of $152,000, and Sandy worked part time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions, and their itemized deductions were well over the standard deduction amount last year. Assume the Fergusons did not receive an advance payment for the 2021 individual recovery credit because they are not eligible for the credit. Use Exhibit 8-10Links to an external site., Tax Rate ScheduleLinks to an external site., Dividends and Capital Gains Tax RatesLinks to an external site., 2021 AMT exemptionLinks to an external site. for reference.

The Fergusons reported making the following payments during the year:

State income taxes of $4,400. Federal tax withholding of $21,000.

Alimony payments to Johns former wife of $10,000 (divorced 12/31/2011).

Child support payments for Johns child with his former wife of $4,100.

$12,200 of real property taxes.

Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer.

$3,600 to Kid Care day care center for Samanthas care while John and Sandy worked.

$14,000 interest on their home mortgage ($400,000 acquisition debt).

$3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car.

$15,000 cash charitable contributions to qualified charities.

Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000.

Required:

Determine Fergusons additional income, entered in Part I, and adjustments to income, entered in Part II, of Schedule 1. These amounts were denoted as "above-the-line" deductions in 1040 Forms used in 2017 and earlier years.

Determine whether the Fergusons are taking the standard deduction or itemize their deductions by completing their Schedule A.

PLEASE FILL OUT THE FORMS!

Part I Additional Income Part I Additional Income