Prepare the Federal Income Tax for Year 2019

Information for Tax Year 2019

Taxpayer Names: Neal and Carolyn Cassady

29 Russell Street

San Francisco, CA 94109

Filing Status: Married Filing Jointly

Dependents:

Cathy Daughter, 20 years old full time student at the University of Santa Clara

Jami Daughter, 17 years old

John - Son, 15 years old

Other

A friend Jack Kerouac (age 49) lived with the Cassadys for the entire year 2018. He did not pay any rent to the Cassadys. He earned $32,000 in Taxable Income from royalties received from a book that he authored.

Social Security Numbers:

Neal (age 49) 186-64-0027

Carolyn (age 49) 154-10-6643

Cathy - 207-30-7807

Jami - 207-40-8081

John 207-40-6625

Wages:

Neal Wages from Southern Pacific Railroad - $82,540

Federal Income Tax Withheld on Neals Form W2 - $7,776

State & Local Income Taxes Withheld on Neals Form W2 - $3,205

Occupation - Brakeman

Sole Proprietor

Carolyn (See information for Schedule C below)

Occupation - Self Employed

Interest Income: Bank of Santa Fe - $557

Dividend Income: Apple Inc. - $1,530 (Non-Qualified Dividend)

Trieste Coffee Company - $360 (Non-Qualified Dividend)

Schedule C information

Proprietor Carolyn Cassady, Uses her own Social Security Number

Office Address: Home Office 29 Russell Street, San Francisco, CA 94109

Principal Business: Author

Business Name - The First Third Company

Accounting Method: - Cash Basis

Materially Participated in Business Yes

Business Started in 2012

Proprietor made no payments that would require filing Form 1099

Gross Receipts

(Royalties on Sales of Books): $58,234

Business Expenses:

Advertising - $302

Auto Expenses

4,305 business miles driven in 2019 (assume that Carolyn is using the mileage method)

Liability Insurance: $3,810

Legal Fees: $800

Credit Card Interest: $317

Office Expenses: $6,005

Travel Expenses:

Business trip 4 days

Roundtrip Airfare to New York City from San Francisco $870

Hotel 4 nights ($280 per night)

Uber Airport/Hotel $70

Meals & Entertainment (business related) - $670

Business Entertainment - $195

Other Expenses

Annual Dues to the Vesuvio Cafe (Exclusive Dinner Club) in San Francisco: $200

Membership to City Lights Bookstores Writers Guild (A professional Organization) $80

Internet Charges: $2,315

Cell Phone Charges: $1,245

Home Office Expenses:

Carolyn uses the Simplified Method

Total Square footage of home - 2,300 feet

Business Office Square footage -250 feet

Personal Expenses:

Child Support paid to Neals first wife LuAnne Henderson - $13,200

Divorce on 11/15/14. LuAnnes Social Security number is 147-69-8829

Real Estate Taxes - $8,210

Medical Expenses:

Prescription Drugs - $605

Health Care Premiums paid by Neal - $7,210

Non-Prescription Drugs

Advil - $35

Foot Cream for Athletes Foot - $9

Benadryl for Allergic Reaction for Bee Stings - $15

Insulin - $350

Heating Pad for back injury - $18

Doctors Bills $1,660

Eyeglasses - $250

Orthodontist Fee for Braces for Jami - $1,600 (received bill in 2019 but not paid until 2020)

Family Membership to Health Fitness Club - $1,050

Physical Therapy for Carolyn for injured knee (Prescribed by Doctor) $370

Mortgage Interest - $16,115

Personal Credit Card Interest - $427

Interest on Personal Auto Loan $1,660

Charitable Contributions:

American Cancer Society - $350

United Way - $60

Church of Saints Peter & Paul - $520

Rental Property

242 Marine Way

Stinson Beach, CA 94970

Rented 365 days (no personal use)

Single Family Residence

Rental Income $36,000

Rental Expenses

Auto Expenses $420

Cleaning & Maintenance $1,770

Commissions $1,440

Insurance $2,050

Mortgage Interest $15,176

Real Estate Taxes $4,350

Utilities $2,124

Depreciation $13,710

Estimated Tax Payment paid by Carolyn in 2019- $2,800

Required:

Prepare the Federal Tax Return for Neal and Carolyn Cassady for the Tax Year Ended December 31, 2019

Forms needed to prepare the Tax Return:

Form 1040

Schedule A

Schedule B

Schedule C

Schedule E

Schedule SE

Schedule 1

What is Neal and Carolyn tax refund for 2019?