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Tax Return Project BA 431, Winter 2016 Use the following information to prepare an individual tax return complete with appropriate schedules and attachments. In addition to the 1040 and schedules, please attach your work papers and calculations. Taxpayer and Spouse: Name: Wilbur Farnstrom Name: Ethel Farnstrom Address: 3083 Honeysuckle Avenue Address: 3083 Honeysuckle Avenue Dallas, OR 97338 Dallas, OR 97338 SS#: 123-45-6789 SS#: 234-56-7890 Birth date: 6/10/1959 Birth date: 2/12/1962 Status: Married, filing jointly Status: Married, filing jointly Name: Edward Farnstrom, son Name: Grace Farnstrom, daughter Address: 3083 Honeysuckle Avenue Address: 3083 Honeysuckle Avenue Dependents: Dallas, OR 97338 Dallas, OR 97338 SS#: 345-67-8901 SS#: 456-78-9012 Birth date: 10/11/1998 Birth date: 9/30/2000 Wilbur is employed as a Bank Manager and has W-2 income of $5,250 per month. Federal taxes of $516 per month are withheld from his gross pay. Ethel is employed part-time as a Receptionist and has W-2 income of $1,900 per month. Federal taxes of $170 per month are withheld from her gross pay. 1 State income taxes totaling $350 per month and $107 per month have been withheld from their gross pay, respectively. Ethel has a small transcription business that she runs from her home. She has dedicated a 4 th bedroom in the family's 3,000 square foot home to the business. The room measures 15 x 20. She reports income for this year of $9,200 from the small business. Ethel paid estimated quarterly taxes of $310 per month for three quarters. Costs relating to the home are as follows: Annual Property taxes$3,800 Annual Mortgage Interest $12,800 Utilities $152 per month Landline telephone $62 per month Business telephone $112 per month Office supplies $55 per month The couple has received $221 in interest income on their savings account for the year. Every month, Wilbur deposits $250 to his IRA account and Ethel deposits $150 to her IRA account. Wilbur takes prescription medication that costs $108 per month. The family incurred dental expenses this year of $1,725 and medical expenses of $2,650 for the year. Ethel went to the eye doctor this year and purchased eyeglasses with a cost to her of $420. Wilbur had to travel to visit a specialist for a heart condition to a city 251 miles from his home. He made the roundtrip twice this year. The Farnstrom family attends Countryside Church each Sunday. They have an automated deduction from their checking account for contributions of $50 per week. The family traveled on behalf of their church this year. They kept a travel log that indicates they traveled 1,010 miles in charitable travel. The employees of the bank where Wilbur works are represented by a union. Union dues are 1.8% of each employee's gross pay. The full-time employees at the office where Ethel works are also represented by a union. Union dues are 1.4% of each full-time employees gross pay. 2 Ethel has some antique jewelry that has sentimental value. To ensure its safety, she has obtained a safe deposit box at Wilbur's bank. The fee for the box is $ 28 per month. The Farnstrom's store their tax returns and investment information in the box. The couple takes their tax return to a CPA for preparation. The CPA worked on the returns for 4 hours at an hourly fee of $175 per hour. Wilbur and Ethel purchased 500 shares of LOL, Inc stock for $8.00 per share 18 months ago. This year they sold the stock for a total of $3,100. The transaction had an investment fee of $25. They also sold 500 shares of long term stock to Ethel's sister for a loss of $1 per share. 3