Please assist in calculating the Taxable Income and filling in the the darker blue framed boxes on the forms.
(I calculated the AGI correctly but my calculations for taxable income have not been right - not sure what I'm missing. I followed the $10,000 limit on itemized deduction for state and local tax (per 2018) and must be getting something incorrect with itemized deductions. I also tried applying the standard deduction for the scenario even though it appears itemized should be higher, but both amounts entered have been incorrect - do they qualify for a business income deduction?)
Required information Comprehensive Problem 6-63 (LO 6-1, LO 6-2, LO 6-3) (Algo) [The following information applies to the questions displayed below.] Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer for a manufacturing firm while Jessie runs a craft business from their home. Jessie's craft business consists of making craft items for sale at craft shows that are held periodically at various locations. Jessie spends considerable time and effort on her craft business, and it has been consistently profitable over the years. Joe and Jessie own a home and pay interest on their home loan (balance of $220,000) and a personal loan to pay for Lizzie's college expenses (balance of $35,000). Neither Joe nor Jessie is blind or over age 65, and they plan to file as married-joint. Assume that the employer portion of the self-employment tax on Jessie's income is $837. Joe and Jessie have summarized the income and expenses they expect to report this year as follows: Income: Joe's salary Jessie's craft sales. Interest from certificate of deposit Interest from Treasury bond funds Interest from municipal bond funds Expenditures: Federal income tax withheld from Joe's wages State income tax withheld from Joe's wages. Social Security tax withheld from Joe's wages Real estate taxes on residence Automobile licenses (based on weight) State sales tax paid Home mortgage interest Interest on Masterdebt credit card Medical expenses (unreimbursed) Joe's employee expenses (unreimbursed) Cost of Jessie's craft supplies Postage for mailing crafts Travel and lodging for craft shows Self-employment tax on Jessie's craft income College tuition paid for Lizzie Interest on loans to pay Lizzie's tuition Lizzie's room and board at college Cash contributions to the Red Cross Joe and Jessie's AGI Joe and Jessie's Taxable income $ www $ 129,700 18,460 1,710 Comprehensive Problem 6-63 Part-a (Algo) a. Determine Joe and Jessie's AGI and taxable income for the year. (Round your intermediate calculations to the nearest whole dollar amount.) 140,100 728 932 $ 13,700 6,520 7,506 6,320 322 1,210 16,600 2,420 1,750 2,520 4,920 151 2,290 1,674 5,900 3,320 12,740 555 1040 PG 1 Form 1040 Page 1. Form 1040 Standard Deduction Filing Status Check only one box. Your first name and middle initial Joe If joint return, spouse's first name and middle initial Jessie Home address (number and street). If you have a P.O. box, see instructions. 19010 N.W. 135th Street; Age/Blindness Dependents If more than four dependents, see instructions and check here Schedule 1 Schedule A Attach Sch. Bif required. City, town, or post office. If you have a foreign address, also complete spaces below. Miami, FL 33054. Foreign country name Standard Deduction for- - Single or Married filing separately. $12,400 - Married filing Department of the Treasury- Internal Revenue Service (99) U.S. Individual Income Tax Return Single jointly or Qualifying widow(er), $24,800 Head of household, $18,650 If you checked any box under Standard Deduction, see instructions. Married filing jointly Married filing separately (MFS) Head of household (HOH) Qualifying widow(er) (QW) If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying person is a child but not your dependent. Someone can claim: 2020 At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? You: (see instructions): (1) First name Lizzie Last name Last name Foreign province/state/county You as a dependent Spouse itemizes on a separate return or you were a dual-status alien Were born before January 2, 1956 Are blind (2) Social security number Last name 1 Wages, salaries, tips, etc. Attach Form(s) W-2 2a Tax-exempt interest 3a Qualified dividends 4a IRA distributions 5a Pensions and annuities OMB No. 1545-0074 567-89-0123 2a 3a 4a 5a State Your spouse as a dependent 6a Social security benefits 6a 7 Capital gain or (loss). Attach Schedule D if required. If not required, check here 8 Other income from Schedule 1, line 9 9 Add lines 1, 2b, 3b. 4b, 5b, 6b. 7, and 8. This is your total income 10 Adjustments to income: a From Schedule 1, line 22 Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Yes Is blind (4) if qualifies for (see instructions): Credit for other dependents Child tax credit 1 2b 3b 4b 5b 6b 7 8 9 Spouse No b Charitable contributions if you take the standard deduction. See instructions c Add lines 10a and 10b. These are your total adjustments to income 11 Subtract line 10c from line 9. This is your adjusted gross income 12 Standard deduction or itemized deductions (from Schedule A) 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 14 Add lines 12 and 13 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter -0- Cat. No. 11320B Form 1040 (2020) For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. 10c 11 12 13 14 15 15 0 0 0 0 0 Social security numbers: Joe: 111-11-1111 Form 1040 for a Head of household with one dependent. 1040 PG 1 Schedule 1 SCHEDULE 1 (Form 1040) Part I 1 2a b Department of the Treasury Internal Revenue Service Name(s) shown on Form 1040, 1040-SR, or 1040-NR 3 4 5 6 7 8 9 Part II 10 11 12 13 14 15 16 17 18a b Jessie: 123-45-6789 Lizzie: 567-89-0123 19 20 21 22 Schedule A Additional Income and Adjustments to Income Attach to Form 1040, 1040-SR, or 1040-NR. Go to www.irs.gov/Form1040 for instructions and the latest information.. Additional Income Taxable refunds, credits, or offsets of state and local income taxes Alimony received Date of original divorce or separation agreement (see instructions) Business income or (loss). Attach Schedule C Other gains or (losses). Attach Form 4797 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E Farm income or (loss). Attach Schedule F Unemployment compensation Other income. List type and amount Combine lines 1 through 8. Enter here and on Form 1040, 1040-SR, or 1040-NR. line 8 Adjustments to Income Educator expenses Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 Health savings account deduction. Attach Form 8889 Moving expenses for members of the Armed Forces. Attach Form 3903 Deductible part of self-employment tax. Attach Schedule SE Self-employed SEP, SIMPLE, and qualified plans Self-employed health insurance deduction Penalty on early withdrawal of savings. Alimony paid Recipient's SSN Date of original divorce or separation agreement (see instructions) IRA deduction Student loan interest deduction Tuition and fees deduction. Attach Form 8917 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040, 1040-SR. or 1040-NR. line 10a Attachment Sequence No. 01 Your social security number 1 2a 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18a 19 20 21 22 0 Cat. No. 71479F Schedule 1 (Form 1040)2020 For Paperwork Reduction Act Notice, see your tax return instructions. THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM IT SELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. 0 1040 PG 1 Form 1040 Schedule A. SCHEDULE A (Form 1040) Department of the Treasury Internal Revenue Service (99) Name(s) shown on Form 1040 or 1040-SR Joe Medical and Dental Expenses Taxes You Paid Interest You Paid Caution: Your mortgage interest deduction may be limited (see instruction). Gifts to Charity Schedule 1 Schedule A Caution: If you made a gift and got a benefit for it, see instructions. Casualty and Theft Losses Other itemized Deductions Total Itemized Deductions Itemized Deductions Go to www.irs.gov/ ScheduleA for instructions and the latest information. Jessie Caution: Do not include expenses reimbursed or paid by others. 1 Medical and dental expenses (see instructions) 2 Enter amount from Form 1040 or 1040-SR, line 11 3 Multiply line 2 by 7.5% (0.075) 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- 5 State and local taxes. Attach to Form 1040 or 1040-SR. Caution: If you are claiming a net qualified disaster loss on Form 4884. Attachment Sequence see the instructions for line 16. No. 07 Your social security number 111-11-1111 2 a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes check this box b State and local real estate taxes (see instructions) C c State and local personal property taxes d Add lines 5a through 5c e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately) 6 Other taxes. List type and amount 7 Add lines 5e and 6 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box a Home mortgage interest and points reported to you on Form 1098. See instructions if limited 13 Carryover from prior year 14 Add lines 11 through 13 b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 12 Other than by cash or check. If you made any gift of $250 or more, see instructions. You must attach Form 8283 if over $500 0 1 3 5a 5b 5c 5d 5e c Points not reported to you on Form 1098. See instructions for special rules d Mortgage insurance premiums (see instructions) e Add lines 8a through 8d 9 Investment interest. Attach Form 4952 if required. See instructions 10 Add lines 8e and 9 11 Gifts by cash or check. If you made any gift of $250 or more, see instructions 11 4 7 10 14 15 16 2020 17 Cat No. 17145C For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. Schedule A (Form 1040) 2020 0
