Mya Lucky Day was unable to work in 2018 (thanks to a workplace injury sustained last year); nonetheless, she still amassed a material amount of gross income in 2018 from various sources.
Mya has asked for your assistance in determining how much of the $511,830 gross income she realized in 2018 must also be recognized as taxable income on her 2018 individual income tax return. She also needs help with the proper presentation of the recognized income amounts on her Form 1040 and Schedule 1.
Directions
- Compute Recognized Gross Income
- Download Application Assignment - Gross Income.docx
. - Input the amount of Myas 2018 recognized gross income (i.e. taxable income) from each source using the Amount Recognized column of the table provided in the PBC information (enter 0 if applicable).
- Prepare Schedule 1, Lines 10 - 22
- Download Schedule 1 - Gross Income Practical Application.pdf
. - Complete the Additional Income section of Myas 2018 Schedule 1 (i.e. Lines 10 22).
- Prepare Form 1040, Lines 1 - 6
- Download Form 1040 - Gross Income Practical Application.pdf
. - Complete the Total income section of Myas 2018 Form 1040, Page 2 (i.e. Lines 1 6).
Sources of Income Amount Realized Amount Recognize Source Document Additional Details 1,700 Form W-2G Paid $20 for BINGO card BINGO grand prize winner Annual neighborhood poker tournament 2,500 None Paid $150 for buy-in Alimony received 36,250 Divorce decree Child support received 48,000 Divorce decree Ties to legally binding 2017 divorce settlement agreement Ties to legally binding 2017 divorce settlement agreement Mya paid 25% of the monthly disability insurance premiums using after-tax dollars; Mya's employer covered the remaining 75% Disability insurance proceeds 22,200 Form 1099-R 480 None Paid $525 for candle-making supplies (candle-making is a hobby for Mya) 17,500 Employment agreement Amounts were received from a state- sponsored workers' compensation plan 41,200 Legal settlement Lawsuit was related to a physical injury Proceeds from homemade candle sales Worker's compensation Lawsuit proceeds - lost wages Lawsuit proceeds - emotional distress Lawsuit proceeds - punitive darriages Birthday card money 15,000 Legal settlement Lawsuit was related to a physical injury 75,000 Legal settlement Lawsuit was related to a physical injury 2,000 None Birthday cash from Great-Aunt Tilda to Mya, her favorite niece Proceeds received when poor Great- Aunt Tilda passed away later in the year (Mya was her beneficiary) Life insurance proceeds 250,000 Insurance policy TOTAL INCOME $511,830 2019 me="DR2 LURREL TEU III checked PAYER'S name, street address, city or town, state or province, 1 Gross distribution OMB No. 1545-01 19 Distributions From country, ZIP or foreign postal code, and phone no. Pensions, Annuities, 22,200.00 Retirement or Against All Odds Insurance Company 2a Taxable amount Profit-Sharing Plans, Be Safe Avenue IRAs, Insurance Careful, WA 01234 Contracts, etc. Form 1099-R 2b Taxable amount Total Copy B not determined distribution Report this PAYER'S TIN RECIPIENT'S TIN 3 Capital gain (included 4 Federal income tax income on your in box 2a) withheld federal tax return. If this form shows federal income RECIPIENT'S name 5 Employee contributions/l 6 Net unrealized tax withheld in Designated Roth appreciation in contributions or employer's securities box 4, attach Mya Lucky Day insurance premiums this copy to your return. Street address (including apt. no.) 7 Distribution IRA 8 Other SEPI code(s) I SIMPLE This information is being furnished to City or town, state or province, country, and ZIP or foreign postal code 9a Your percentage of total 9b Total employee contributions the IRS. distribution %$ 10 Amount allocable to IRR 11 1st year of FATCA filing 12 State tax withheld 13 State/Payer's state no. 14 State distribution within 5 years desig. Roth contrib. requirement September Account number (see instructions) Local tax withheld 16 Name of locality 17 Local distribution Date of payment Form 1099-R www.irs.gov/Form1099R Department of the Treasury - Intemal Revenue Service OMB No. 1545-0238 2018 Form W-2G UUURRECTED IT checked PAYER'S name, street address, city or town, province or state, country, and 1 Reportable winnings 2 Date won ZIP or foreign postal code May 25th, 2018 1,700.00 BINGO Is Our Name-o 3 Type of wager 4 Federal income tax withheld Winner Winner Chicken Dinner Lane Bingo - $20 card Las Vegas, NV $$$$$ 5 Transaction 6 Race Card No. 2525 7 Winnings from identical wagers 8 Cashier PAYER'S federal identification number PAYER S telephone number KSC 9 Winner's taxpayer identification no. 10 Window $$-$$$$$$$ ($$$) $$$$$$$ $S$-$-$$$$ Certain Gambling Winnings WINNER'S name 11 First I.D. 12 Second I.D. Mya Lucky Day Street address (including apt. no.) 13 State Payer's state identification no. 14 State winnings This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. City or town, province or state, country, and ZIP or foreign postal code 15 State income tax withheld 16 Local winnings 17 Local income tax withheld 18 Name of locality Copy C For Winner's Records Under penalties of perjury. I declare that, to the best of my knowledge and belief, the name, address, and taxpayer identification number that I have furnished correctly identify me as the recipient of this payment and any payments from identical wagers, and that no other person is entitled to any part of these payments. Signature Date Form W-2G www.irs.gov/w2g Department of the Treasury - Intemal Revenue Service Sources of Income Amount Realized Amount Recognize Source Document Additional Details 1,700 Form W-2G Paid $20 for BINGO card BINGO grand prize winner Annual neighborhood poker tournament 2,500 None Paid $150 for buy-in Alimony received 36,250 Divorce decree Child support received 48,000 Divorce decree Ties to legally binding 2017 divorce settlement agreement Ties to legally binding 2017 divorce settlement agreement Mya paid 25% of the monthly disability insurance premiums using after-tax dollars; Mya's employer covered the remaining 75% Disability insurance proceeds 22,200 Form 1099-R 480 None Paid $525 for candle-making supplies (candle-making is a hobby for Mya) 17,500 Employment agreement Amounts were received from a state- sponsored workers' compensation plan 41,200 Legal settlement Lawsuit was related to a physical injury Proceeds from homemade candle sales Worker's compensation Lawsuit proceeds - lost wages Lawsuit proceeds - emotional distress Lawsuit proceeds - punitive darriages Birthday card money 15,000 Legal settlement Lawsuit was related to a physical injury 75,000 Legal settlement Lawsuit was related to a physical injury 2,000 None Birthday cash from Great-Aunt Tilda to Mya, her favorite niece Proceeds received when poor Great- Aunt Tilda passed away later in the year (Mya was her beneficiary) Life insurance proceeds 250,000 Insurance policy TOTAL INCOME $511,830 2019 me="DR2 LURREL TEU III checked PAYER'S name, street address, city or town, state or province, 1 Gross distribution OMB No. 1545-01 19 Distributions From country, ZIP or foreign postal code, and phone no. Pensions, Annuities, 22,200.00 Retirement or Against All Odds Insurance Company 2a Taxable amount Profit-Sharing Plans, Be Safe Avenue IRAs, Insurance Careful, WA 01234 Contracts, etc. Form 1099-R 2b Taxable amount Total Copy B not determined distribution Report this PAYER'S TIN RECIPIENT'S TIN 3 Capital gain (included 4 Federal income tax income on your in box 2a) withheld federal tax return. If this form shows federal income RECIPIENT'S name 5 Employee contributions/l 6 Net unrealized tax withheld in Designated Roth appreciation in contributions or employer's securities box 4, attach Mya Lucky Day insurance premiums this copy to your return. Street address (including apt. no.) 7 Distribution IRA 8 Other SEPI code(s) I SIMPLE This information is being furnished to City or town, state or province, country, and ZIP or foreign postal code 9a Your percentage of total 9b Total employee contributions the IRS. distribution %$ 10 Amount allocable to IRR 11 1st year of FATCA filing 12 State tax withheld 13 State/Payer's state no. 14 State distribution within 5 years desig. Roth contrib. requirement September Account number (see instructions) Local tax withheld 16 Name of locality 17 Local distribution Date of payment Form 1099-R www.irs.gov/Form1099R Department of the Treasury - Intemal Revenue Service OMB No. 1545-0238 2018 Form W-2G UUURRECTED IT checked PAYER'S name, street address, city or town, province or state, country, and 1 Reportable winnings 2 Date won ZIP or foreign postal code May 25th, 2018 1,700.00 BINGO Is Our Name-o 3 Type of wager 4 Federal income tax withheld Winner Winner Chicken Dinner Lane Bingo - $20 card Las Vegas, NV $$$$$ 5 Transaction 6 Race Card No. 2525 7 Winnings from identical wagers 8 Cashier PAYER'S federal identification number PAYER S telephone number KSC 9 Winner's taxpayer identification no. 10 Window $$-$$$$$$$ ($$$) $$$$$$$ $S$-$-$$$$ Certain Gambling Winnings WINNER'S name 11 First I.D. 12 Second I.D. Mya Lucky Day Street address (including apt. no.) 13 State Payer's state identification no. 14 State winnings This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. City or town, province or state, country, and ZIP or foreign postal code 15 State income tax withheld 16 Local winnings 17 Local income tax withheld 18 Name of locality Copy C For Winner's Records Under penalties of perjury. I declare that, to the best of my knowledge and belief, the name, address, and taxpayer identification number that I have furnished correctly identify me as the recipient of this payment and any payments from identical wagers, and that no other person is entitled to any part of these payments. Signature Date Form W-2G www.irs.gov/w2g Department of the Treasury - Intemal Revenue Service
