Note: This problem is for the 2021 tax year. Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2019. He lives at 4680 Dogwood Lane, Springfield, MO 65801 . He is employed as a paralegal by a local law firm. During 2021, he had the following receipts: Logan inherited securities worth $60,000 from his uncle, Daniel, who died in 2021 . Logan also was the designated beneficiary of an insurance policy on Daniel's life with a maturity value of $200,000. The lot in St. Louis was purchased on May 2,2016 , for $85,000 and held as an investment. Because the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5 , 2021 , for $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g.r camper, boat, furniture, and fishing and hunting equipment). Logan estimates that the property sold originally cost at least twice the $9,000 he recelved and has declined or stayed the same in value since Sara and Daniel died. Logan's expenditures for 2021 include the following: While Logan and his dependents are covered by his employer's health insurance policy, he is subject to a deductible, and dental care is not included. The $10,500 dental charge was for Helen's implants. Helen is Logan's widowed mother, who lives with him (see below). Logan normally pledges $2,400 (\$200 per month) each year to his church. On December 5,2021 , upon the advice of his pastor, he prepaid his pledge for 2022 . Logan's household, all of whom he supports, includes the fallowing: Helen receives a madest Social Security benefit. Asher, a son, is a full-time student in dental school and earns $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married. Federal income tax of $4,200 was withheld from his wages. Required: Compute Logan's income tax for 2021. If Logan has any overpayment on his income tax, he wants the refund sent to him. Assume that the proper amounts of Social Security and Medicare taxes were witheid. Logan received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored. Logan does not own and did not use any virtual currency during the year, and he does not want to contribute to the Presidential Election Campaign Fund. - Make realistic assumptions about any missing data. - Enter all amounts as positive numbers except any losses. Use the minus sign to indicate a loss. - If an amount box does not require an entry or the answer is zero, enter "0". Form 1040 Complete Form 1040 below for Logan Taylor. \begin{tabular}{ll|l|l|l} Form & Department of the Treasury-Internal Revenue Service (99) & & & \\ 1040 & U.S. Individual Income Tax Return & 2021 & OMB No. 1545-0074 & IRS Use Only \\ \hline \end{tabular} BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040(2021) Complete Logan's Schedule A for 2021 . BAA For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Schedule A (Form 1040) 2021 Schedule D Complete Loaan's Schedule D for 2021 . Use the minus sian to indicate a loss. 18 If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the amount, if any, from line 7 of that worksheet. 19 If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see instructions), 20 Are lines 18 and 19 both zero or blank and are you not filing Form 4952 ? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040SR, line 16 . Don't complete lines 21 and 22 below. No. Complete the Schedule D Tax Worksheet in the instructions. Don't complete lines 21 and 22 below. 21 If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040NR, line 7 , the smaller of: - The loss on line 16; or - ($3,000), or if married filing separately, ($1,500) Note: When figuring which amount is smaller, treat both amounts as positive numbers. 22 Do you have qualified dividends on Form 1040,10405R, or 1040NR, line 3a ? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040SR, line 16. o. Complete the rest of Form 1040,1040SR, or 1040NR. Schedule 8812 Complete Logan's Schedule 8812. 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. 14a Enter the smaller of line 7 or line 12 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. BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 8812 (Form 1040) 2021 2021 Tax rate Schedules Use the 2021 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the In early 2022, the following take place: - Helen decides that she wants to live with one of her daughters and moves to Arizona. - Asher graduates from dental school and joins an existing practice in St. Louis. - Mia marries, and she and her spouse move in with his parents. - Using the insurance proceeds he received on Daniel's death, Logan pays off the mortgage on his personal residence. Logan believes that these events may have an effect on his tax position for 2022 . Therefore, he requests your advice. Complete the letter to Logan explaining in general terms the changes that will occur for tax purposes. Assume that Logan's salary and other factors not mentioned (e.g., property and state income taxes) will remain the same. The standard deduction for qualifying widower is $25, 900 , for head of household $19,400 and for single $12,950 in 2022 . Use the 2022 tax rate schedules (click here) in projecting Logan's tax for 2022 . In response to your inquiry regarding the Federal income tax situation for 2022 , the news following developments will cause favorable. The - Your filina status moves from surviving spouse to - Thogressive tax rates. - For various reasons, - Because of these changes you will benefit from Based on last year's data, an estimate of your Federal income tax liability for 2022 is If I can be of further assistance to you in this matter, please do not hesitate to contact me. Sincerely, Eduardo Rodriguez Partner Note: This problem is for the 2021 tax year. Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2019. He lives at 4680 Dogwood Lane, Springfield, MO 65801 . He is employed as a paralegal by a local law firm. During 2021, he had the following receipts: Logan inherited securities worth $60,000 from his uncle, Daniel, who died in 2021 . Logan also was the designated beneficiary of an insurance policy on Daniel's life with a maturity value of $200,000. The lot in St. Louis was purchased on May 2,2016 , for $85,000 and held as an investment. Because the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5 , 2021 , for $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g.r camper, boat, furniture, and fishing and hunting equipment). Logan estimates that the property sold originally cost at least twice the $9,000 he recelved and has declined or stayed the same in value since Sara and Daniel died. Logan's expenditures for 2021 include the following: While Logan and his dependents are covered by his employer's health insurance policy, he is subject to a deductible, and dental care is not included. The $10,500 dental charge was for Helen's implants. Helen is Logan's widowed mother, who lives with him (see below). Logan normally pledges $2,400 (\$200 per month) each year to his church. On December 5,2021 , upon the advice of his pastor, he prepaid his pledge for 2022 . Logan's household, all of whom he supports, includes the fallowing: Helen receives a madest Social Security benefit. Asher, a son, is a full-time student in dental school and earns $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married. Federal income tax of $4,200 was withheld from his wages. Required: Compute Logan's income tax for 2021. If Logan has any overpayment on his income tax, he wants the refund sent to him. Assume that the proper amounts of Social Security and Medicare taxes were witheid. Logan received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored. Logan does not own and did not use any virtual currency during the year, and he does not want to contribute to the Presidential Election Campaign Fund. - Make realistic assumptions about any missing data. - Enter all amounts as positive numbers except any losses. Use the minus sign to indicate a loss. - If an amount box does not require an entry or the answer is zero, enter "0". Form 1040 Complete Form 1040 below for Logan Taylor. \begin{tabular}{ll|l|l|l} Form & Department of the Treasury-Internal Revenue Service (99) & & & \\ 1040 & U.S. Individual Income Tax Return & 2021 & OMB No. 1545-0074 & IRS Use Only \\ \hline \end{tabular} BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040(2021) Complete Logan's Schedule A for 2021 . BAA For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Schedule A (Form 1040) 2021 Schedule D Complete Loaan's Schedule D for 2021 . Use the minus sian to indicate a loss. 18 If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the amount, if any, from line 7 of that worksheet. 19 If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see instructions), 20 Are lines 18 and 19 both zero or blank and are you not filing Form 4952 ? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040SR, line 16 . Don't complete lines 21 and 22 below. No. Complete the Schedule D Tax Worksheet in the instructions. Don't complete lines 21 and 22 below. 21 If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040NR, line 7 , the smaller of: - The loss on line 16; or - ($3,000), or if married filing separately, ($1,500) Note: When figuring which amount is smaller, treat both amounts as positive numbers. 22 Do you have qualified dividends on Form 1040,10405R, or 1040NR, line 3a ? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040SR, line 16. o. Complete the rest of Form 1040,1040SR, or 1040NR. Schedule 8812 Complete Logan's Schedule 8812. 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. 14a Enter the smaller of line 7 or line 12 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. BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 8812 (Form 1040) 2021 2021 Tax rate Schedules Use the 2021 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the In early 2022, the following take place: - Helen decides that she wants to live with one of her daughters and moves to Arizona. - Asher graduates from dental school and joins an existing practice in St. Louis. - Mia marries, and she and her spouse move in with his parents. - Using the insurance proceeds he received on Daniel's death, Logan pays off the mortgage on his personal residence. Logan believes that these events may have an effect on his tax position for 2022 . Therefore, he requests your advice. Complete the letter to Logan explaining in general terms the changes that will occur for tax purposes. Assume that Logan's salary and other factors not mentioned (e.g., property and state income taxes) will remain the same. The standard deduction for qualifying widower is $25, 900 , for head of household $19,400 and for single $12,950 in 2022 . Use the 2022 tax rate schedules (click here) in projecting Logan's tax for 2022 . In response to your inquiry regarding the Federal income tax situation for 2022 , the news following developments will cause favorable. The - Your filina status moves from surviving spouse to - Thogressive tax rates. - For various reasons, - Because of these changes you will benefit from Based on last year's data, an estimate of your Federal income tax liability for 2022 is If I can be of further assistance to you in this matter, please do not hesitate to contact me. Sincerely, Eduardo Rodriguez Partner