Note: This problem is for the 2021 tax year. Alice 3. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6784 and 111-11-1113, respectively. Alice's birthday is September 21, 1974, and Bruce's is June 27, 1973. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (Employer Identification Number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (Employer Identification Number 11-1111111). The following information is shown on their Wage and Tax Statements (Form W-2) for 2021. mohn Byras provide over half of the support of their two children, Cynthia (born January 25, 1997, Social Security number 123-45-6788) and When they February 7, 2001, Social Security number 123-45-6780). Both children are full-time students and live with the Byrds except When they are away at college. Cynthia eamed $6,200 from a summer internship in 2021, and John earned $3,800 from a part-time Job. Both children received scholarships covering tuition and materials. During 2021, the Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (born March 6,1945 , Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $1,600,000 on December 28 . he medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support. Dther relevant information follows: - When they filed their 2020 state return in 2021, the Byrds paid additional state income tax of $900. - During 2021, Alice and Bruce attended a dinner dance sponsored by the Lowell Police Disability Association (a qualified charitable organization). The Byrds paid $300 for the tickets. The cost of comparable entertainment would normally be $50. - The Byrds contributed $5,000 to Lowell Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of $350 ) to the Salvation Army. All donations are supported by receipts, and the dothing is in very good condition. - Via a crowdfunding site (gofundmeicom), Alice and Bruce made a oift to a needy family who lost their home in a fire (\$400). In addition, they made several cash gifts to homeless individuals downtown (estimated to be $65 ). - In 2021, the Byrds recelved interest income of $2,750, which was reported on a Form 1099-1NT from Second National Bank, 125 Oak Street, Lowell, MA 01850 (Employer Identification Number 98-7654322). - The home mortgage interest was reported on Form 1098 by Lowell Commercial Bank, P.O. Box 1000, Lowell, MA 01850 (Employer Identification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2021) was taken out by the Byrds on May 1, 2017. - Alice's emplover requires that all employees wear uniforms to work. During 2021, Alice spent $850 on new uniforms and $566 on laundry charges. - Bruce pald $400 for an annual subscription to the Joumal of Franchise Management and $741 for annual membership dues to his professional assodation. - Neither Alice's nor Bruce's employer reimburses for employee expenses. - The Byrds do not keep the recolpts for the sales taxes they paid and had no major purchases subject to sales tax. - This year the Byrds gave each of their children $2,000, which was then deposited into their Roth IRAs. - Alice and Bruce paid no estimated Federal income tax, and they did not engage in any virtual currency transactions during the year. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campalon Fund. The Byrds received the appropriate recovery rebates (economic impact payments); related questions in ProConnect fax should be lonored. Required: Compute net tax payable or refund due for Alice and Bruce Byrd for 2021. If they have overpald, they want the amount to be refunded to them - Make realistic assumptions about any missing data. - If an amount box does not require an entry or the answer is zero, enter " 0 ". - Enter all amounts as positive numbers. - It may be necessary to complete the tax schedules before completing Form 1040. Compute net tax payable or refund due for Alice and Bruce Byrd for 2021. If they have overpaid, they want the amount to be refunded to them. - Make realistic assumptions about any missing data. - If an amount box does not require an entry or the answer is zero, enter "0". - Enter all amounts as positive numbers. - It may be necessary to complete the tax schedules before completing Form 1040. - When computing the tax liability, do not round your immediate calculations. If required, round your final answers to the nearest dollar. - Use the Tax Rate Schedule provided. Do not use the Tax Tables. Note: for the Tax Planning section only, use the 2022 Tax Rate Schedule found in Appendix A of the textbook. Form Filing Status At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency? Standard Deduction Someone can claim: Age/Blindmess You: Spouse: Attach 2a. Tax-exempt interest ..i 2 2a BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. 021 estimated tax payments and amount applied from 2020 return ............ Caution: Do not indude expenses reimbursed or paid by others Medical 1 Medical and dental expenses (see instructions) ........... and Dental 2 Enter amount from form 1040 or 1040- Expenses 4 Subtract line 3 from line 1 . If line 3 is more than line 1 , enter -0 . Taxes You 5 state and local taxes. Paid a State and local income taxes or general sales taxes. You may include either income taxes or oeneral sales taxes on line 5 , but not both. If you elect to indude general sales taxes instead of income taxes, check this box. b State and local real estate taxes (see instructions) .......... c state and local personal property taxes ................ d Add lines 5 through 5c......... e Enter the smaller of line 5d or $10,000($5,000 if married filing separately) ............................ 6 other taxes. Ust type and amount Caution: a Home mortgage interest and points reported to you on Form 1098. Your mortgage See instructions if limited ........................... interest b Home mortgage interest not reported to you on Form 1098. See deduction may instructions if limited. If paid to the person from whom you be limited (see bought the home, see instructions and show that person's name. instructions). identifying no., and address c Points not reported to you on Form 1098. See instructions for special rules. d Mortage insurance premiums (see instructions) ... ........... 9 Investment interest. Attach Form 4952 if required, See instructions. \begin{tabular}{|c|} \hline 8a \\ \hline 8b \\ \hline 8c \\ \hline 8d \\ \hline 8g \\ \hline 9 \\ \hline \end{tabular} 10 Add lines 8e and 9 Gifts by cash or check. If you made any oift of $250 or more, Charity see instructions ............................ 12. Other than by cash or check. If you made any gift of $250 or more, If you made a see instructions. You must attach Form 8283 if over $500. gift and got a 13 Carryover from prior year ......................... benefit for it, see instructions, 14 Add lines 11 through 13 Casulty and theft loss(es) from a federally declared disaster (other than net qualified disaster Theft Losses losses). Attach Form 4684 and enter the amount from line 18 of that form. See lnstructions. 15 Other 16 Other-from list in instructions. List type and amount Itemized Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Itemized Form 1040 or 10405R, line 12 a . .................................... 17 Deductions 13 If you elect to itemize deductions even though they are less than your standard deduction, check this box BMA For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. SCHEDULE B (Form 1040) Interest and Ordinary Dividends Department of the Treasury Internal Revenue Service (99) Attachment Sequence No, 08 Name(s) shown on return Bruce M. and Alice 3. Byrd Part I Interest 1 List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see the instructions and list this interest first. Also, show that buyer's social security number and address (See instructions and the instructions for Form 1040, line 2b,) Note: If you recelved a form 1099-TNT, Form 1099-O10, or substitute statement from a brokerage firm, list the firm's BRA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule B (Form 1040) 2021 \begin{tabular}{l|r|r|} SCHEDULE8812(Form1040) & Credits for Qualifying Children & OMB No. 1545-0074 \\ & and Other Dependents & 2021 \\ \hline DepartmentoftheTreasuryInternalRevenueService(99) & - Gottach to Form 1040, 1040-SR, or 1040-NR. & Attachment \\ \hline \end{tabular} Name(s) shown on return Your social security number Bruce M. and Alice J. Byrd Part I-A Child Tax Credit and Credit for other Dependents 1 Enter the amount from line 11 of your Form 1040, 1040-SR, or 1040-NR. 2a. Enter income from Puerto Rico that you excluded. b Enter the amounts from lines 45 and 50 of your form 2555 C. Enter the amount from line 15 of your Form 4563 d Add lines 2 a through 2c.. 3 Add lines 1 and 2d 4a Number of qualifying children under age 18 with the required social security number b Number of children induded on line 4 a who were under age 6 at the end of 2021 . 5 If line 4a is more than zero, enter the amount from the Line 5 worksheet; otherwise, enter 0..5 6 Number of other dependents, including any qualifying children who are not under age 18 or who do not have the required sodial security number ............. Caution: Do not indude yourself, your spouse, or anyone who is not a U.S. citizen, U.S. national, or U.S. resident alien, Also, do not include anyone you induded on line 43. 7 Multiply line 6 by $500. 8 Add lines 5 and 7 9 Enter the amount shown below for your filing status. - Married filing jointly $400,000 - All other filing statuses $200,000 10 Subtract line 9 from line 3. - If zero or less, enter -0 . - If more than zero and not a multiple of $1,000, enter the next multiple of $1,000. For example, If the result is $425, enter $1,000; if the result is $1,025, enter $2,000, etc. A check here if you (or your spouse if married filing jointly) have a principal place of abode in the United B Check here if you (or your spouse if married filing jointly) are a bona fide resident of Puerto Rico for 2021 a Part I-B Filers Who Check a Box on Line 13 Caution: if you did not check a box on line 13, do not complete Part I-B; instead, skip to Part I-C. c if line 14a is zero, enter -0 -; otherwise, enter the amount from the Credit Limit Worksheet A I Enter the aggregate amount of advance chlld tax credit payments you (and your spouse if filing jointly) received for 2021. See your Letter(s) 6419 for the amounts to include on this line. If you are missing Letter 6419 , see the instructions before entering an amount on this line ........................14f Caution: If the amount on this line doesn't match the agoregate amounts reported to you (and your spouse if filing fointly) on your Letter(s) 6419 , the processing of your return will be delayed. a Subtract line 14 from line 14 . If zero or less, enter -0- on lines 149 through 141 and 00 to Part II ....... h Enter the smaller of line 14d or line 140 . This is your credit for other dependents. Enter this amount on line 19 of your form 1040, 1040-SR, or 1040-NR. i Subtract line 14h from line 140. This is your refundable child tox credit. Enter this amount on line 28 of your form 1040, 1040-SR, or 1040-NR For Paperwork Reduction Act Notice, see your tax return instructions. Use the 2021 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the amount of tax computed may vary slightly from the amount listed in the tables.) Alice and Bruce are planning some significant changes for 2022. They have provided you with the following information and asked you to project their taxable income and tax liability for 2022. Assume that the Byrds will itemize their deductions next year. - The Byrds will invest the $1,600,000 of life insurance proceeds in short-term certificates of deposit (CDs) and use the interest for living expenses during 2022. They expect to earn interest of $32,000 on the CD5. - Bruce has been promoted to regional manager, and his salary for 2022 will be $88,000. He estimates that state income tax withheld will increase by $4,000 and the 50 cial Security tax withheld will be $5,456. - Alice, who has been diagnosed with a serious illnes5, will take a leave of absence from work during 2022, so she will not receive a salary or incur any work-related expenses during the year. The estimated cost for her medical treatment is $15,400, of which $6,400 will be reimbursed by their insurance company in 2022. Their medical insurance premiums will increase to $9,769. - Property taxes on their residence are expected to increase to $5,100. - The Byrds' home mortgage interest expense and charitable contributions are expected to be unchanged from 2021. - John will oraduate from college in December 2021 and will take a job in New York City in January 2022. His starting salary will be $46,000. In 2022 , the medical expenses are reduced by 7.5% of AGI Assume that all of the information reported in 2021 will be the same in 2022 unless other information has been presented above. Use the 2022 Tax Rate Schedule found in Appendix A of the textbook. Based on this information, the Bryd's projected itemized deductions for 2022 would be taxable income would be and the related tax liability for 2022 would be