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Instructions Note: This problem is for the 2019 tax year. Daniel B. Butler and Freida C. Butler, husband and wife, file a joint return. The Butlers live at 625 Oak Street in Corbin, KY 40701. Dan's Social Security number is 111-11-1112, and Freida's is 123-45-6780. Dan was born on January 15, 1968, and Freida was born on August 20, 1959. During 2019, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home! a. Gina, their daughter, age 22, a full-time student, who married on December 21, has no income of her own and did not file a joint return with her husband, Casey, who earned $10,600 during 2019. Gina's Social Security number is 123-45-6788. b. Willie, their son, age 19. graduated high school in May 2019. He is taking a leap year and will not begin college until 2020. He had gross income of $6,300 in 2019. Willie's Social Security number is 123-45-6787 c. Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786. Dan was employed as a manager by WJ, Inc. (employer identification number 11-1111111. 604 Franklin Street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899 Central Street, Corbin, ky 40701). Selected information from the W-2 forms provided by the employers is presented below. Dan and Freida use the cash method. Line Description Dan Frelda 1 Wages, tips, other compensation $74,000 $86,000 2 Federal income tax withheld 11.000 12.400 17 State income tax withheld 2,960 3,440 Freida sold a house on December 30, 2019, and will be paid a commission of 53,100 (not included in the $86,000 reported on the W-2) on the January 10, 2020, dosing date. Other income (as reported on 1099 Forms) for 2019 consisted of the following: Dividends on CSX stock (qualified) interest on savings at Second Bank Interest on City of Corbin bonds Interest on First Bank CD $4,200 1,600 900 382 The $382 from First Bank an original issue discount. Dan and Freide collected $16,000 on the First Bank CD that matured on September 30, 2019. The CD was purchased on October 1, 2017, for $14,995, and the yield to maturity was 3.3% Dan participated on a game show and won a cash prire of $7,000. In addition to the above information, Dan and Frelda's itemized deductions included the following: Pald on 2019 Kentucky Income tax 5700 Personal property tax paid 600 Real estate taxes paid 1,800 Interest on home mortgage (Corbin S&L) 4,900 Cash contributions to the United Way 800 Sales tax from the sales tax table is $1,860. Dan and Freida made Federal estimated tax payments of $8,000. They have never owned or used any virtual currency, and they do not wish to contribute to the Presidential Election Campaign. The Kentucky income tax rate is 4%. Required: Compute Dan and Freida's 2019 Federal income tax payable (or refund due). Use Form 1040 and Schedules 1, 3, B and the Qualified Dividends and Capital Gain Tax Worksheet to complete this tax return. If there is a tax overpayment, the Butlers would like a refund. If additional tax is due, assume no underpayment penalty applies. It may be necessary to complete the tax schedules before completing Form 1040 Enter all amounts as positive numbers. If an amount box does not require an entry or the answer is zero, enter "O". When computing the tax liability, do not round your immediate calculations. If required, round your answers to the nearest dollar. Make realistic assumptions about any missing data. Use the Tax Rate Schedule provided. Do not use the Tax Tables. Use the 2019 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.) 2019 Tax Rate Schedules Single-Schedule X Head of household Schedule Z If taxable income is: Over- of the amount over But not over If taxable income is: Over of the amount But not over The tax is: The tax is: over $0 $ 9,700 10% $0 $0 10% $0 $13,850 52,850 9,700 39,475 $ 970.00 + 12% 9,700 13,850 $ 1,385.00 + 12% 13,850 39,475 84,200 4,543.00 + 22% 39,475 52,850 84,200 6,065.00 + 22% 52,850 84,200 84,200 160,725 14,382.50 + 24% 84,200 84,200 160,700 12,962.00 + 24% 31,322.00 + 32% 160,725 204,100 32,748.50 + 3296 160,725 204,100 160,700 160,700 204,100 204,100 510,300 204,100 510,300 45,210.00 + 35% 204,100 46,628.50 35% 153,798.50 + 37% 510,300 510,300 510.300 152,380.00 + 37% 510,300 Married filing jointly or Qualifying widow(er) Schedule Y-1 Married filing separately Schedule Y-2 of the If taxable income is: Over- But not over- If taxable income is: Over amount over The tax is: of the amount over- But not over- The tax is: $0 $ 19,400 ...... 109 $0 $0 $ 9,700 ..... 109 $0 19,400 19,400 9,700 39,475 9,700 $ 970.00 + 12% 4,543.00 + 22% $ 1,940.00 + 12% 9,086.00 + 22% 28,765.00 + 24% 78,950 84,200 78,950 168,400 39,475 78,950 168,400 321,450 408,200 612,350 39,475 84,200 168,400 160,725 14,382.50 + 24% 65,497.00 + 32% 160,725 204,100 321,450 408,200 612,350 321,450 408,200 32,748.50 + 32% 46,628.50 + 35% 84,200 160,725 204,100 306,175 93,257.00 + 35% 204,100 305,175 164,709.50 + 37% 612,350 306.175 ++++ 82,354.75 + 37% Schedule 1 Complete Butler's Schedule 1 below for 2019, SCHEDULE 1 OMB No. 1545-0074 (Form 1040 or 1040-SR) Additional Income and Adjustments to Income 2019 Department of the Treasury Attach to Form 1040 or 1040 SR. Attachment Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Sequence No. 01 Name(s) shown on Form 1040 or 1040-SR Your social security number Daniel B. and Freida C. Butler 111-11-1112 At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual Yes No currency? Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 1 2a Alimony received 2a b Date of original divorce or separation agreement (see instructions) 3 Business income or loss). Attach Schedule ...... 3 4 Other gains or losses). Attach Form 4297 4 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule s 5 5 6 6 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 Prize 7 7 8 8 9 10 11 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a ...... Part II Adjustments to Income 10 Educator expenses.. 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106. 12 Health savings account deduction. Attach Form 8889 13 Moving expenses for members of the Armed Forces. Attach Form 3903 14 Deductible part of self-employment tax. Attach Schedule SE 15 Self-employed SEP, SIMPLE, and qualified plans... 16 Self-employed health insurance deduction 17 Penalty on early withdrawal of savings 12 13 14 15 16 17 18a Alimony paid 18a b Recipient's SSN c Date of original divorce or separation agreement (see Instructions) 9 10 11 12 Part II Adjustments to Income 10 Educator expenses .... 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106. 12 Health savings account deduction. Attach Form 8889. 13 Moving expenses for members of the Armed Forces. Attach Form 3903 14 Deductible part of self-employment tax, Attach Schedule SE 15 Self-employed SEP, SIMPLE, and qualified plans.... 16 Self-employed health insurance deduction 17 Penalty on early withdrawal of savings 18a Alimony pald.. b Recipient's SSN 13 14 15 16 17 18a c Date of original divorce or separation agreement (see instructions) 19 TRA deduction 19 20 Student loan interest deduction 20 21 21 Tuition and fees. Attach Form 8917 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 1040-5R, line sa 22
