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Individual Return 2 Alice J. and Bruce M. Smith are married taxpayers who file a joint return. Their social security numbers are 123-45-6789 and 111-11-1111, respectively. Alice's birthday is September 21, 1966, and Bruce's is June 27, 1965. They live at 43 Revere Avenue, Lowell MA01850. Alice is the office manager for Lowell Dental Clinic. Bruce is the self-employed physical therapist. The following information is shown on Alice's Wage and Tax Statement Form W-2) for 2017 Line Dividend income (qualified dividend) from investing in Apple $200 Inc. from selling Netflix stock d for 7 months 5,000 A loss froms Bank of America stock (hold for 15 months An s bad debt hint:tax treatment as short-term 2,000) The Smiths had the s relating to their residence d 2017 Alice Description Wage, tips, otherc Federal income tax withheld Social security tax withheld Medicare tax withheld State income tax Taxes interest on home $5,000 58,000 960 3,596 tion 2. Medical expense for 2017: $4,500 7,600 8,500 premium paid for two children 6. Doctor bill for Sam Operation for Sam 610 for Sam 2017, Bruce recorded the foll items ofhis business: Utilities Union dues paid by Alice's work uniform Revenue from patient visits Pro Mortgage interest on the office Depreciation on the office Malpractice insurance Utilities paid for the office Office staff salaries Rent payments on equioment health insurance premium paid for himself health insurance Alice 600 tax on the office 4,500 5,500 37,500 13,750 Prepare the Federal income tax return of 2017 for the Smiths. You will include Form 1040, Schedule C, Schedule SE (use the first page of SE to calculate), and Schedule A 51,000 15,000 2,500 5,000 The following important learning objectives are covered in this tax retuarn project: Determine gross income (eg. life insurance proceeds) Calculate Brusiness income (using Schedule C) Determine qualifying child and qualrifying relative Determine self-employment tax (use schedule SE Determine the amount of itemized deductions (e.g. medicail Personal and dependent exemptions Capital gain/loss Calculate taxes d for his employees Bruce made the quarterly federal tax payments totaled S40,000 (same as tax withheld and should be reported on line 64) expenses) The Smiths provide over half of the support of their two children, Cynthia (born January 25, 1989, Social security number 123-45-6788) and John (bon February 7, 1995, Social Security number 123-45-67S6). Both children are full-time students and live with the Smiths except when they are away at and John earned $3,800 from a part-time job. college. Cynthia earned $4,200 from a Hint: the different tax treatments should be applied to the following iterms During 2017, The Smiths furnished 60% of the total support of Bruce's widower father, Sam Smith (bom March 6, 1937, social security number 123-45-6777). 5am died in November and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $800, 000 on December 28. Health insurance premton paid or Bruce Smith a his dependent tou be reported on page 1 Form 1040, it is "For AGI deduction) Health insurance premium paid for Bruce's employees (should be reported on Sch. C) Unreimbursed medical expenses paid for taxpayers and family members (should reported on Soh. A) The Smiths also made some investment activities during 2017. The following information is shown their investment incomeloss) for 2017 Check numbers AGI: 169556 Taxable income: 130063; refund of $5218 (line 75)