Problem 1

Beverly and Ken Hair have been married for 3 years. Beverly works as an accountant at Cypress Corporation. Ken is a full-time student at Southwest Missouri State University (SMSU) and also works part-time during the summer at Cypress Corp. Kens birthdate is January 12, 1994 and Beverlys birthdate is November 4, 1996. Bev and Kens earnings and income tax withholdings are reported on the following Forms W-2:

51,000 WAGES 4,610 INCOME FEDERAL TAX WITHHELD 3,168.20 SS WITHHELD 740.95 MEDICARE WITHHELD BEVERLY

2,750 WAGES 0 FEDERAL INCOME WITHHELD 170.50 SS WITHHELD 39.88 MEDICARE WITHHELD KEN

The Hairs have interest income of $956 on City of St. Louis bonds. Beverly and Ken also received the following Form 1099-INT and 1099-DIV:

INTEREST INCOME 656.62

DIVIDENDS 302.00

Ken is an excellent student at SMSU. He was given a $1,750 scholarship by the university to help pay educational expenses. The scholarship funds were used by Ken for tuition and books.

Last year, Beverly was laid off from her former job and was unemployed during January 2020. She was paid $1,847 of unemployment compensation until she started work with her current employer, Cypress Corporation.

Ken has a 4-year-old son, Robert R. Hair, from a prior marriage that ended in divorce in 2015. During 2020, he paid his ex-wife $300 per month in child support. Robert is claimed as a dependent by Kens ex-wife.

During 2020, Kens aunt died. The aunt, in her will, left Ken $15,000 in cash. Ken deposited this money in the Boatmans Bank savings account.

Beverly and Ken received a $2,400 EIP in 2020.

Required: Complete the Hairs federal tax return for 2020 on Form 1040, Schedule 1, and the Qualified Dividends and Capital Gain Tax Worksheet.