1. Pat and Anita Wong are married and have one child Erin that is 10 years old who lives with them and they support. Filing Status -
2. # and type of dependents
3. This year, the Wongs received gross income reported on their W-2s. Anita works as an accountant for Cypress Corp. and Pat works in their sales office while also going to school for his MBA. Total Combined wages, tips, salaries is $96,100.

4. Additionally, they had Interest Income (1099-INT $656.62) and Dividend Income (1099-Div $302). They had to pay an early withdraw penalty for the interest they withdrew.
5. Pat attended Eastern Kentucky University online MBA program. They paid 6,000 in tuition and Pat received a $2,000 scholarship to help pay for the rest of his tuition this year. Anita graduated from EKU a couple of years ago and is still paying her student loans back. She paid $1,200 in principle and $1,500 in interest this year.
6. As a salesperson, Pat incurred $2,000 in travel expenses related to his employment that were not reimbursed by his employer.
7. During 2020, Pats aunt died. The aunt, in her will, left Pat $20,000 in cash. Pat deposited this money in the Boatmans Bank savings account. .
8. Pat and Anita received $3,400 in Coronavirus stimulus package money this year. They do not know whether this is going to be included in taxable income or not.
9. They own a U.S. Savings Bonds (Series EE). The bond had a value of $10,000 on January 1, 2020, and their value is $10,700 on December 31, 2020. They have not made an elective with respect to these bonds.
10. Pat was laid off for one month this year due to coronavirus and received $3,047.
11. Anita bought a lottery ticket hoping for better luck this tax year and did win $2,500. The winning amount was paid out in November.
12. Anita was married before Pat and she receives alimony payments of $8,000 for the year. Her divorce was final in 2008.
13. The Gross own a piece of empty land held as an investment. They paid $500 of real property taxes on the property.
14. The Wongs contributed $2,000 to their IRA this year, eligible for deduction.
15. Pat and Anita both had state income taxes withheld.
16. Anita has 100 shares of stock from her previous employer. This year the value of the stock went up by $30 per share. She is hoping it will continue to go up this next year.
17. Anita had bought 100 shares of Ford stock back in 2009 during the recession. This year the stock was doing well, so she decided to sell the stock. She had purchased the stock for $4 per share and she sold it for $18. She did have to pay a $100 broker fee to sell the stock (eligible expense to sell the stock).
18. The Wongs purchased a home this year. They do not qualify for the first time home owners credit. However, they did want to use their mortgage interest of $6,700 and their mortgage insurance premiums (MIP) of $675 on their taxes.
19. Anita was covered by health plans provided by her employer, but Pat is not eligible for the plan until next year. Pat had to purchase health insurance on a separate policy, and they paid $3,360 for Pat to be covered.
20. The Wongs paid $1,204 in credit card interest this year.
21. Pat, likes to make furniture on the weekends. He has done quite well, so last year he formed a business named Wong Custom Furniture. This year he had $21,000 in sales revenue (gross receipts). Not included in the $21,000, three people still owe him for his work, for a total of $8,000 in accounts receivables. He gets the lumber for free for coming to remove it off his uncles land, so only has the expense of the nails, screws, material, and stain in the furniture. This year he had Cost of Goods Sold for $2,000. Other expenses include, 135 car and truck mileage to pick up the lumber (look up business mileage rate for 2020), depreciation of the lumber mill machinery $12,000, supplies $1,200, business insurance $3,200, and contract labor for someone to deliver the furniture $800.
22. Pats business does qualify for the qualified business income (QBI) deduction.
23. The Wongs donated $15,000 to their church.
24. Erin broke her elbow this year and the hospital bill was $15,600. However, of that the Wongs only had unreimbursed expenses of $5,800. They drove 190 miles in total to take Erin back and forth to his appointments.
25. Anitas retirement account (IRA) sends monthly statements and in total Anitas retirement account earned $350 in interest and earnings. No distribution was made to Anita, she will not receive distributions until he retires.
26. Pat and Anita paid $900 in taxes on their vehicles.

• Pat paid $50 in taxes on his boat and four wheeler.
• The new house property taxes for this year was $5,400.
• Their new house had a flood damage in March. It cost them $2,000 to fix the damages. The flooding was caused by an unusual amount of rain that month for the area. The house had never been flooded before. They were hoping the government would declare the storm a natural disaster, but they did not.

• Directions:

• Begin by entering the Taxpayers names and dependent information into the top of the 1040 form.
• Then go through and identity which component each letter corresponds to (Tip: start with a blank Component Content notes sheet). I generally label forms I receive from clients with my own coding system so that I know where and when to enter them.
• Then, begin calculating and entering the amounts into the tax forms. The forms you will be working with are 1040, Schedule 1, and Schedule C. Note: you will not have information for every line and for the Schedule C you should only do the first page. Leave lines blank that do not have a number, do not enter zero. Also do not enter cents, round to the whole dollar.
• STOP at the Taxable Income. Return 2 will complete more of the return to determine whether they owed or get a refund.