Question
Please prepare 1040 for the following scenario Mary incurred some extra medical expenses to treat a broken wrist from a mountain biking accident. In April,
Please prepare 1040 for the following scenario
Mary incurred some extra medical expenses to treat a broken wrist from a
mountain biking accident. In April, Mary broke her wrist in a mountain biking
accident. She paid $2,000 for a visit to the hospital emergency room and
follow-up visits with her doctor. While she recuperated, Mary paid $300 for
prescription medicine and $700 to a therapist for rehabilitation. Mary's
insurance reimbursed her $1,840 for these expenses. Steve drove Mary 110
miles back and forth from the doctor's office and the physical therapist's
facility during the period Mary was being treated for her broken wrist. Mary
incurred $1,214 additional amounts of unreimbursed qualifying medical
expenses.
m. Steve paid $31,154 withheld of Federal Taxes and $6,700 of state income
taxes through withholding from his paycheck.
n. Mary and Steve paid $2,700 of real estate taxes on their personal residence
and $850 of real estate taxes on an investment property she owns in
Oklahoma. Finally, Mary paid $180 as a registration fee for her automobile
(the fee is based on the year the automobile was manufactured, not its
value).
o. Mary and Steve acquired their home on February 15, 2021, for $300,000
(also its value throughout the year). They purchased it by paying $40,000 as
a down payment and borrowing $260,000 from a credit union. In January
2021, they paid points of $2,600 to obtain the loan and during 2021 they paid
$6,567 in interest on the loan. Their home is the collateral for the loan.
p. This year they donated $1,700 to the Red Cross. Mary also gave $200 in
cash to various home-less people she met on the streets during the year.
Once a month, Steve does volunteer work at a Goodwill Industries outlet
about 20 miles from their home. Altogether, Steve traveled 500 miles during
the year driving to and from the Goodwill outlet. Steve has determined that
the services she provided during the year are reasonably valued at $1,500.
Prior to moving into their new home, Steve and Mary donated excess
possessions to Goodwill Industries. They estimated that they paid over $900
for these items, including clothing, a table, and a couch. However, although
the items were in excellent condition, they were worth only $160.
Step by Step Solution
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