Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me with this Schedule A tax form 1040. Thanks. ACT 411 - Taxation Fall 2016 Tax Preparation Project Instructions: Use the following information

Please help me with this Schedule A tax form 1040. Thanks.

image text in transcribed ACT 411 - Taxation Fall 2016 Tax Preparation Project Instructions: Use the following information to prepare a complete 2016 individual federal income tax return, Form 1040. Include Schedule A. You should use your text, notes, Form 1040, schedules and their instructions, tax law resources, i.e. IRC, Treasury Regulations, IRS publications, etc. You cannot use tax preparation software. The purpose of this project is to put everything you have learned in this class into practice. Your project is due Dec 14th at 3:30PM (before the final exam). Please hand in a hard copy of the completed Forms and include an attachment listing calculations for each individual line item. You may work individually or in groups. If working in a group, you are limited to 4 students and you will submit one copy. Please make sure to include the names of all members of your group. Please consider all limitations, phaseouts, thresholds, etc. If you have any questions, contact me! *Tip: Use AGI for MAGI. In this problem, it is the same amount in most instances and when it isn't, the modification does not affect the outcome. Facts: Eric Thomas (SSN: 012-34-5678) and his wife Meghan Thomas (SSN: 012-34-5679) have always filed a joint tax return. The couple were high school sweethearts and have been together since their high school graduation in 1985. They have three children. Their oldest, Gabriella (SSN: 999-55-1111), is 22 years old, and a college student at UMass Dartmouth. Eric and Meghan also have identical twins, Jon (SSN: 999-442222) and Sam (SSN: 999-66-3333). The twins are 16 years old, and are juniors at New Bedford High School. The Thomas' have two dogs, Mona, a Dachshund, and Derby, a hound mix. The entire family lives in a house located at 111 Reed Street, New Bedford, MA 02740. They bought their home 15 years ago for $175,000. Eric works as a correctional officer in a Federal Prison located in Woburn, MA. He travels 75 miles, each way, between his home and his workplace. Eric's W-2 for the year reported the following: Company Woburn Correctional Facility Gross Wages $52,000 Federal Income Tax Withholding $2,200 Eric's employers withheld all applicable and appropriate payroll taxes. State Income Tax Withholding $700 Eric also helped a friend with a carpentry job, working as a sub-contractor. He earned $350 for two days work. Eric's friend drove him to the job site and supplied him with all required tools and materials. Eric did not have any self- employed business expenses for this job. Meghan works as a veterinarian in Fairhaven, MA. She has worked at Hairhaven Animal Hospital for the past 12 years. Meghan's W-2 for the year reported the following: Company Hairhaven Animal Hospital Gross Wages 74,000 Federal Income Tax Withholding $4,100 State Income Tax Withholding $1,900 Meghan's employers withheld all applicable and appropriate payroll taxes. Meghan is still paying off her college loans for veterinary school; she paid $3,200 in qualified student loan interest during the year. Meghan and Eric had additional sources of income during the year. Meghan received $50,000 in life insurance proceeds when her favorite aunt, Mary, passed away. Meghan and Eric also have several bank accounts at Bank of America that earned a total of $310 in interest during the year. The couple also received $200 in interest income on municipal bonds that they purchased to benefit the New Bedford School District. Gabriella is single and a full-time college student at University of Massachusetts - Dartmouth. She is pursuing her bachelor's degree in accounting. She is about to enter her fourth year of college. In order to keep costs down, Gabriella still lives at home with her parents and commutes to school. Gabriella works part-time at No Problemo to help pay for her car and cell phone. Gabriella earned $3,200 working part time in 2016. Her parents pay all of her other living expenses, i.e., food, board, clothing, medicine, tuition, books, etc. These expenses total $12,700 for the year. UMass Dartmouth issued a Form 1098-T at the end of the year. Gabriella's education expenses were as follows: Tuition: $6,500 Books: $2,000 Jon is heavily involved in sports and other extra-curricular activities. He currently has no free time in which to work but he hopes to get a part-time job at a local park next summer. Sam is permanently disabled and requires constant care. He attends an after-school program every weekday until 6PM, which is when Eric gets home from work. The Thomas' paid a total of $5,400 for Sam's care in 2016. Jon broke his arm this past year while playing baseball. The Thomas' incurred the following medical expenses related to Jon's treatment: Hospital and doctor's bills: $2,300 Prescription medicine: $ 200 Rehabilitation therapy: $ 150 The Thomas' also incurred additional family medical expenses as follows: Dentist: $1,500 Doctors: $ 230 Prescriptions: $ 80 Vitamins/ Supplements $ 100 Surgery (cosmetic): $8,500 Meghan and Eric did not receive any reimbursement from their insurance company for these payments. All expenses paid were co-pays, part of their minimum payments, or not covered by their insurance. The Thomas' incurred expenses related to their home. They paid $7,400 in mortgage interest in 2016. They paid the city of New Bedford $5,400 in real estate taxes during the year. They also paid the city $420 in excise tax for their two vehicles (this amount is based on the emissions of the vehicles). The city of New Bedford requires them to license their dogs and they paid $50 for two dog licenses; the fee is based on the number of dogs per household. The Thomas' are trying to prepare for retirement and took a loan from Bank of America for $4,000 to use for investment purposes. They decided that Google stock was the best investment and used the entire loan proceeds to purchase 15 shares of Google stock. The Thomas' paid $210 in investment interest expenses during the year. Google did not pay out any dividends in 2016. Meghan used some of the money she received from her aunt Mary's death to invest $10,000 in her cousin Stevie's new ice cream shop, Schmelty, LLC; Meghan does not participate in the business and is a silent partner. Schmelty, LLC took out a non-recourse loan in October 2016 to do some renovations to the shop over the winter. Meghan's share of the debt is $1,500. Schmelty, LLC did well this year and reported a net profit. Meghan's share of net operating income was $3,500. Meghan and Eric bought a piece of land in New Hampshire for $7,000 in the year they got married. They had hoped to build a cabin on the property but never got around to developing the land. Due to being so busy with their kids and work, they decided to sell the property in 2016; they sold the property for $15,000. They paid their realtor a commission of $2,000 for the sales transaction. Finally, Meghan and Eric paid their CPA $350 to prepare their tax return in 2016. Eric and Meghan would like to receive a refund (if any) of taxes overpaid for the year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Debra C. Jeter, Paul K. Chaney

7th edition

1119373204, 9781119373254 , 978-1119373209

More Books

Students also viewed these Accounting questions