Larry K. and Cathy L. Zepp have been married 18 years. Larry is 52 years old (Social Security # 433-45-6789) while Cathy is 47 years old (Social Security #433-45-6788). They live at 1234 Elm Dr., Indianapolis, IN 46202. The Zepps have two children, a son, Zachary W. Zepp (111-33-4444, date of birth 12/1/2002), and a daughter, Jennifer A. Zepp (111-33-4445, date of birth 1/5/2007). Both children live with them the entire year. Zachary is a full-time student. Larry is a salesperson employed by DSK Industries. This year he earned $135,400. Federal and state income taxes withheld were $17,000 and $7,000, respectively. Social Security tax withheld was $7,961 and Medicare tax withheld was $1,963. Cathy freelances as an independent contractor in computer graphics. She use her own name as the name of her business. Her earnings received from various engagements was $12,000. Her only expenses paid during the year were for office supplies of $3,000. She paid estimated federal income taxes during the year of $1,000 ($250 on each due date). Her business uses the cash method of accounting. Other income earned by the couple included the following: Interest Income $4,000 from Highland National Bank $975 from a State of Indiana bond Dividends $300 from Ford Motor Company $575 from Eastman Kodak $125 from IBM $1,200 from Apple All dividends were qualifying dividends Stock Transactions 1. Sold 100 shares of IBM for $10 per share on August 1st. The Zepps had paid $170 per share when they purchased the stock on July 18, 2014. 2. Sold 400 shares of Apple stock for $78 per share on July 20th. The Zepps had paid $35 per share on May 7, 2005. Rental Property The couple owns a duplex that it rents out. It is located at 111 Nowhere Ave. Indianapolis, IN. They received $12,000 in rental income this year and had the following expenses related to the duplex: Insurance Mortgage Interest 700 8,000 Repairs 1,500 Property taxes 600 Depreciation 2,000 The Zepps had the following expenses during the year: Unreimbursed medical expenses 10,200 Interest on a home mortgage 11,500 Real property taxes on their home 4,000 State taxes withheld (see above) Charitable contributions 3,500 Prepare the Zepp's 2022 individual income tax return. Complete Form 1040 and Schedule 1 through 3 that go with the form 1040 as well as Schedules A, B, C, D, E and SE. Filing Status: The Zepps, are married filing jointly. Income: Larry's income from DSK Industries is $135,400, and federal and state income taxes withheld were $17,000 and $7,000, respectively. Social Security tax withheld was $7,961, and Medicare tax withheld was $1,963. Cathy's freelance income is $12,000, and she paid $1,000 in estimated federal income taxes during the year. The Zepps also earned interest income of $4,000 from Highland National Bank and $975 from a State of Indiana bond. They received qualifying dividends of $300 from Ford Motor Company, $575 from Eastman Kodak, $125 from IBM, and $1,200 from Apple. The Zepps sold 100 shares of IBM for $10 per share on August 1st, with a cost basis of $17,000, and sold 400 shares of Apple stock for $78 per share on July 20th, with a cost basis of $14,000. Rental Property: The Zepps received $12,000 in rental income from their duplex located at 111 Nowhere Ave., Indianapolis, IN. They had expenses related to the duplex, including property taxes of $1,200, repairs and maintenance of $1,500, insurance of $800, and depreciation of $4,000. Deductions: Schedule A: The Zepps can deduct state and local taxes of $7,000, mortgage interest of $8,000, and charitable contributions of $2,500. Schedule B: They earned $24 in interest income from a savings account. Schedule C: Cathy can deduct her business expenses of $3,000. Schedule D: The Zepps, have capital gains of $16,400 from the sale of stocks. Schedule E: They need to report their rental income and expenses on this form. Self-Employment Taxes: Cathy needs to pay self-employment tax on her freelance income, which is calculated on Schedule SE