Question
Read the following letter and help Shady Slim with his tax situation. Please assume that gross income I $172,900 for purposes of this problem. December
Read the following letter and help Shady Slim with his tax situation. Please assume that gross income I $172,900 for purposes of this problem. December 31, 2015 To the friendly student tax preparer: Hi, its Shady Slim again. I just got back from my 55th birthday party, and Im told that you need some more information from me in order to complete my tax return. Im an open book! Ill tell you whatever I think you need to know. Let me tell you a few more things about my life. As you may recall, I am divorced from my wife, Alice. I know that its unusual, but I have custody of my son, Shady, Jr. The judge owed me a few favors and I really love the kid. He lives with me full-time and my wife gets him every other weekend. I pay the vast majority of my sons expenses. I think Alice should have to pay some child support, but she doesnt have to pay a dime. The judge didnt owe me that much, I guess. I had to move this year after getting my job at Roca Cola. We moved on February 3 of this year, and I worked my job at Roca Cola for the rest of the year. I still live in the same state, but I moved 500 miles away from my old house. I left a little bit early to go on a house-hunting trip that cost me a total of $450. I hired a moving company to move our stuff at a cost of $2,300. Junior and I got a hotel room along the way that cost us $45 (I love Super 8!). We spent $35 on meals on the way to our new home. Oh yeah, I took Junior to a movie on the way and that cost $20. Can you believe Im still paying off my student loans, even after 15 years? I paid a total of $900 in interest on my old student loans this year. Remember when I told you about that guy that hit me with his car? I had a bunch of medical expenses that were not reimbursed by the lawsuit or by my insurance. I incurred a total of $20,000 in medical expenses, and I was only reimbursed for $11,000. Good thing I can write off medical expenses, right? I contributed a lot of money to charity this year (and have receipt documentation for all contributions). Im such a nice guy! I gave $1,000 in cash to the March of Dimes. I contributed some of my old furniture to the church. It was some good stuff! I contributed a red velvet couch and my old recliner. The furniture is considered vintage and is worth $5,000 today (the appraiser surprised me!), even though I only paid $1,000 for it back in the day. When I contributed the furniture, the pastor said he didnt like the fabric and was going to sell the furniture to pay for some more pews in the church. Some people just have no taste, right? Roca Cola had a charity drive this year and I contributed $90. Turns out, I dont even miss it, because Roca Cola takes it right off my paycheck every month$15 a month starting in July. Oh, one other bit of charity from me this year. An old buddy of mine was down on his luck. He lost his job and his house. I gave him $500 to help him out. I paid a lot of money in interest this year. I paid a total of $950 in personal credit card interest. I also paid $13,000 in interest on my home mortgage. I also paid $2,000 in real estate taxes for my new house. A few other things I want to tell you about last year. Someone broke into my house and stole my kids brand new bicycle and my set of golf clubs. The total loss from theft was $900. I paid $100 in union dues this year. I had to pay $1,000 for new suits for my job. Roca Cola requires its managers to wear suits every day on the job. I spent a total of $1,300 to pay for gas to commute to my job this year. Oh, this is pretty cool. Ive always wanted to be a firefighter. I spent $1,000 in tuition to go to the local firefighters school. I did this because someone told me that I can deduct the tuition as an itemized deduction, so the money would be coming back to me. Requires: That should be all the information you need right now. Please calculate my taxable income and complete pages 1 and 2 of Form 1040 (through taxable income, line 43) and Schedule A. Youre still doing this for free, right? (Hide: Filling the form 1040 and form Schedule A and calculate the gross income flowing the table below I. Gross income
Expenses Deductible
Moving expensense yes or no? Amount?
Student loan interest yes or no? Amount?
Accident medical expense yes or no? Amount?
Charitable contributions yes or no? Amount?
Personal credit card interest yes or no? Amount?
Home mortagage interest yes or no? Amount?
Real estate taxes yes or no? Amount?
Theft loss yes or no? Amount?
Union dues yes or no? Amount?
Job suits yes or no? Amount?
commute gas yes or no? amount?
Firefighter school yes or no? Amount?
Filling in Form 1040: https://www.irs.gov/pub/irs-pdf/f1040.pdf
Filling in Form Scheduele A: https://www.irs.gov/pub/irs-pdf/f1040sa.pdf
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