Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2019. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from her former husband (divorced in 2016). Reba also rents out a small apartment building. This vear Reba received $50,000 of rental payments from tenants and she incurred $19,500 of expenses associated with the rental. Reba and her daughter Heather (20 years old at the end of the year) moved to Georgia in January of this year. Reba provides more than one-half of Heather's support. They had been living in Colorado for the past 15 years, but ever since her divorce, Reba has been wanting to move back to Georgia to be closer to her family. Luckily, last December, a teaching position opened up and Reba and Heather decided to make the move. Reba paid a moving company $2,010 to move their personal belongings, and she and Heather spent two days driving the 1,426 miles to Georgia Reba rented a home in Georgia. Heather decided to continue living at home with her mom, but she started attending school full-time in January and throughout the rest of the year at a nearby university. She was awarded a $3.000 partial tuition scholarship this year, and Reba helped out by paying the remaining $500 tuition cost. If possible, Reba thought it would be best to claim the education credit for these expenses. Reba wasn't sure if she would have enough items to help her benefit from itemizing on her tax return. However, she kept track of several expenses this year that she thought might quality if she was able to itemize. Reba paid $5,800 in state income taxes and $12,500 in charitable contributions during the year. She also paid the following medical-related expenses for herself and Heather: Insurance premiums Medical care expenses Prescription medicine Nonprescription medicine New contact lenses for Heather $7,952 $ 1,100 $ 350 $ 100 $ 200 Shortly after the move, Reba got distracted while driving and she ran into a street sign. The accident caused $900 in damage to the car and gave her whiplash. Because the repairs were less than her insurance deductible, she paid the entire cost of the repairs. Reba wasn't able to work for two months after the accident. Fortunately, she received $2,000 from her disability insurance. Her emplover, the Central Georgia School District, paid 60 percent of the premiums on the policy as a nontaxable fringe benefit and Reba paid the remaining 40 percent portion A few years ago. Reba acquired several investments with her portion of the divorce settlement This year she reported the following income from her investments: $2.200 of interest income from corporate bonds and $1,500 interest income from City of Denver municipal bonds. Overall, Reba's stock portfolio appreciated by $12,000 but she did not sell any of her stocks Heather reported $6,200 of interest income from corporate bonds she received as gifts from her Father over the last several vears. This was Heather's only source of income for the year Rebo had $10.000 of federal income taxes withheld by her employer. Heather made $1.000 of estimated tax payments during the year. Reba did not make any estimated payments. Reba had qualifying insurance for purposes of the Affordable Care Act (ACA) GIUSS IHCorrie $ 38,000 14,400 50,000 1,200 2,200 0 $ 105,800 19,500 19,500 86,300 Salary Alimony received Rental receipts Disability insurance payments Interest income from corporate bonds Interest income from municipal bonds (1) Gross income Deductions for AGI: Expenses for rental property (2) Total for AGI deductions (3) AGI From AGI deductions: Medical expenses State income taxes Charitable contributions (4) Total itemized deductions (5) Standard deduction (6) Greater of itemized deductions or standard deduction (7) Taxable income (8) Tax on taxable income (9) Credits (10) Tax prepayments Tax refund 972 5,800 12,500 19,272 18,350 19,272 67,028 9,184 685 10,000 (1,501) $ $ 30. Some information does not carry over from Page 1. Page 2 38,000 "ages, salaries, tips, etc. Attach Form(s) W-2 Tax-exempt interest Qualified dividends IRAS, pensions, and annuities Social security benefits Total income. Add lines 1 through 5. Add any amount from Schedule 1. line 2,200 1,500 b Taxable interest Ordinary dividends b Taxable amount b Taxable amount 14.400 54,600 djusted gross income. If you have no adjustments to income, enter the amount from line 8: otherwise, subtract Schedule 1 line 36, from line 6 Standard deduction or itemized deductions (from Schedule A) Qualified business income deduction (see instructions) Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter- a Tax (see inst.) (check if any from 1. Form(s) 8814 2. Form 4972 86,300 19,272 67,028 9,184 13/ 9,184 9,184 10,000 b Add any amount from Schedule 2 and check here a Child tax credit/credit for other dependents 500 b Add any amount from Schedule 3 and check here Subtract line 12 from line 11. If zero or less, enter- Other taxes. Attach Schedule 4 Total tax. Add lines 13 and 14 15 Federal income tax withheld from Forms W-2 and 1099 16 Refundable credits: a EIC (see inst.) b Sch. 8812 c Form 8863 Add any amount from Schedule 5 17 Add lines 16 and 17. These are your total payments. 18 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here 20a Routing number c Type: Checking Savings Account number Amount of line 19 you want applied to your 2019 estimated tax 211 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions Estimated tax penalty (see instructions) 23] for instructions and the latest information. HIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. O 2019 McGraw-Hill Education 19 10,000 816 816 Form 1040 (2018) 1 of Form 1040. LE 1 Additional Income and Adjustments to Income OMB No 1545-0074 2018 13 156 166 the Treasury Attach to Form 1040 mue Service Go to www.irs.gov/Form1040 for instructions and the latest information. Attachment Sequence No. 01 w on Form 1040 Your social security number Dixon 111-11-1111 1-9 b Reserved 1-9b 10 Taxable refunds, credits, or offsets of state and local income taxes 101 5,800 11 Alimony received 11 14,400 12 Business income or (loss). Attach Schedule C or C-EZ 12 2.200 13 Capital gain or loss). Attach Schedule D if required. If not required, check here 50,000 14 Other gains or losses). Attach Form 4797 14 15a Reserved 16a Reserved 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Altach Schedule E 17 19,500 18 Farm income or loss). Attach Schedule F 18 19 Unemployment compensation 191 20a Reserved 20b 21 Other income. List type and amount Disability Insurance Payments 1.200 22 Combine the amounts in the far right column. If you don't have any adjustments to income, enter here and include on Form 1040, line 8. Otherwise, go to line 23 87.300 23 Educator expenses 23 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 25 Health savings account deduction. Attach Form 8889 26 Moving expenses for members of the armed forces. Attach Form 3903 27 Deductible part of self-employment tax. Attach Schedule SE 28 Self-employed SEP. SIMPLE, and qualified plans 29 Self-employed health insurance deduction 30 Penalty on early withdrawal of savings 31a Alimony paid Recipient's SSN 32 IRA deduction 33 Student loan interest deduction 33 341 34 Reserved 35 Reserved 38 Add lines 23 through 35 Schedule 1 (Form 1040) 2018 Fork Reduction Act Notice, see your tax return instructions. Cat No. 71479F THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2019 McGraw-Hill Education. 221 SBSBUSBAR of Form 1040. Nonrefundable Credits OMB No 1545-0074 2018 Treasury Service on Form 1040 Attach to Form 1040 Go to www.irs.goviForm 1040 for instructions and the latest information. Attachment Sequence No. 03 Your social security number ble 48 Foreign tax credit. Attach Form 1116 if required 49 Credit for child and dependent care expenses. Attach Form 2441 50 Education credits from Form 8863, line 19 51 Retirement savings contributions credit. Attach Form 3880 52 Reserved 53 Residential energy credit. Attach Form 5895 53 54 Other credits from Form 3800 O b8801 0 C 54 55 Add the amounts in the far right column. Enter here and include on Form 1040, Ine 12 k Reduction Act Notice, see your tax return instructions. Cat. No. 71470F Schedule 3 (Form 1040) 2018 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2019 McGraw-Hill Education. 55 Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2019. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from her former husband (divorced in 2016). Reba also rents out a small apartment building. This vear Reba received $50,000 of rental payments from tenants and she incurred $19,500 of expenses associated with the rental. Reba and her daughter Heather (20 years old at the end of the year) moved to Georgia in January of this year. Reba provides more than one-half of Heather's support. They had been living in Colorado for the past 15 years, but ever since her divorce, Reba has been wanting to move back to Georgia to be closer to her family. Luckily, last December, a teaching position opened up and Reba and Heather decided to make the move. Reba paid a moving company $2,010 to move their personal belongings, and she and Heather spent two days driving the 1,426 miles to Georgia Reba rented a home in Georgia. Heather decided to continue living at home with her mom, but she started attending school full-time in January and throughout the rest of the year at a nearby university. She was awarded a $3.000 partial tuition scholarship this year, and Reba helped out by paying the remaining $500 tuition cost. If possible, Reba thought it would be best to claim the education credit for these expenses. Reba wasn't sure if she would have enough items to help her benefit from itemizing on her tax return. However, she kept track of several expenses this year that she thought might quality if she was able to itemize. Reba paid $5,800 in state income taxes and $12,500 in charitable contributions during the year. She also paid the following medical-related expenses for herself and Heather: Insurance premiums Medical care expenses Prescription medicine Nonprescription medicine New contact lenses for Heather $7,952 $ 1,100 $ 350 $ 100 $ 200 Shortly after the move, Reba got distracted while driving and she ran into a street sign. The accident caused $900 in damage to the car and gave her whiplash. Because the repairs were less than her insurance deductible, she paid the entire cost of the repairs. Reba wasn't able to work for two months after the accident. Fortunately, she received $2,000 from her disability insurance. Her emplover, the Central Georgia School District, paid 60 percent of the premiums on the policy as a nontaxable fringe benefit and Reba paid the remaining 40 percent portion A few years ago. Reba acquired several investments with her portion of the divorce settlement This year she reported the following income from her investments: $2.200 of interest income from corporate bonds and $1,500 interest income from City of Denver municipal bonds. Overall, Reba's stock portfolio appreciated by $12,000 but she did not sell any of her stocks Heather reported $6,200 of interest income from corporate bonds she received as gifts from her Father over the last several vears. This was Heather's only source of income for the year Rebo had $10.000 of federal income taxes withheld by her employer. Heather made $1.000 of estimated tax payments during the year. Reba did not make any estimated payments. Reba had qualifying insurance for purposes of the Affordable Care Act (ACA) GIUSS IHCorrie $ 38,000 14,400 50,000 1,200 2,200 0 $ 105,800 19,500 19,500 86,300 Salary Alimony received Rental receipts Disability insurance payments Interest income from corporate bonds Interest income from municipal bonds (1) Gross income Deductions for AGI: Expenses for rental property (2) Total for AGI deductions (3) AGI From AGI deductions: Medical expenses State income taxes Charitable contributions (4) Total itemized deductions (5) Standard deduction (6) Greater of itemized deductions or standard deduction (7) Taxable income (8) Tax on taxable income (9) Credits (10) Tax prepayments Tax refund 972 5,800 12,500 19,272 18,350 19,272 67,028 9,184 685 10,000 (1,501) $ $ 30. Some information does not carry over from Page 1. Page 2 38,000 "ages, salaries, tips, etc. Attach Form(s) W-2 Tax-exempt interest Qualified dividends IRAS, pensions, and annuities Social security benefits Total income. Add lines 1 through 5. Add any amount from Schedule 1. line 2,200 1,500 b Taxable interest Ordinary dividends b Taxable amount b Taxable amount 14.400 54,600 djusted gross income. If you have no adjustments to income, enter the amount from line 8: otherwise, subtract Schedule 1 line 36, from line 6 Standard deduction or itemized deductions (from Schedule A) Qualified business income deduction (see instructions) Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter- a Tax (see inst.) (check if any from 1. Form(s) 8814 2. Form 4972 86,300 19,272 67,028 9,184 13/ 9,184 9,184 10,000 b Add any amount from Schedule 2 and check here a Child tax credit/credit for other dependents 500 b Add any amount from Schedule 3 and check here Subtract line 12 from line 11. If zero or less, enter- Other taxes. Attach Schedule 4 Total tax. Add lines 13 and 14 15 Federal income tax withheld from Forms W-2 and 1099 16 Refundable credits: a EIC (see inst.) b Sch. 8812 c Form 8863 Add any amount from Schedule 5 17 Add lines 16 and 17. These are your total payments. 18 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here 20a Routing number c Type: Checking Savings Account number Amount of line 19 you want applied to your 2019 estimated tax 211 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions Estimated tax penalty (see instructions) 23] for instructions and the latest information. HIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. O 2019 McGraw-Hill Education 19 10,000 816 816 Form 1040 (2018) 1 of Form 1040. LE 1 Additional Income and Adjustments to Income OMB No 1545-0074 2018 13 156 166 the Treasury Attach to Form 1040 mue Service Go to www.irs.gov/Form1040 for instructions and the latest information. Attachment Sequence No. 01 w on Form 1040 Your social security number Dixon 111-11-1111 1-9 b Reserved 1-9b 10 Taxable refunds, credits, or offsets of state and local income taxes 101 5,800 11 Alimony received 11 14,400 12 Business income or (loss). Attach Schedule C or C-EZ 12 2.200 13 Capital gain or loss). Attach Schedule D if required. If not required, check here 50,000 14 Other gains or losses). Attach Form 4797 14 15a Reserved 16a Reserved 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Altach Schedule E 17 19,500 18 Farm income or loss). Attach Schedule F 18 19 Unemployment compensation 191 20a Reserved 20b 21 Other income. List type and amount Disability Insurance Payments 1.200 22 Combine the amounts in the far right column. If you don't have any adjustments to income, enter here and include on Form 1040, line 8. Otherwise, go to line 23 87.300 23 Educator expenses 23 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 25 Health savings account deduction. Attach Form 8889 26 Moving expenses for members of the armed forces. Attach Form 3903 27 Deductible part of self-employment tax. Attach Schedule SE 28 Self-employed SEP. SIMPLE, and qualified plans 29 Self-employed health insurance deduction 30 Penalty on early withdrawal of savings 31a Alimony paid Recipient's SSN 32 IRA deduction 33 Student loan interest deduction 33 341 34 Reserved 35 Reserved 38 Add lines 23 through 35 Schedule 1 (Form 1040) 2018 Fork Reduction Act Notice, see your tax return instructions. Cat No. 71479F THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2019 McGraw-Hill Education. 221 SBSBUSBAR of Form 1040. Nonrefundable Credits OMB No 1545-0074 2018 Treasury Service on Form 1040 Attach to Form 1040 Go to www.irs.goviForm 1040 for instructions and the latest information. Attachment Sequence No. 03 Your social security number ble 48 Foreign tax credit. Attach Form 1116 if required 49 Credit for child and dependent care expenses. Attach Form 2441 50 Education credits from Form 8863, line 19 51 Retirement savings contributions credit. Attach Form 3880 52 Reserved 53 Residential energy credit. Attach Form 5895 53 54 Other credits from Form 3800 O b8801 0 C 54 55 Add the amounts in the far right column. Enter here and include on Form 1040, Ine 12 k Reduction Act Notice, see your tax return instructions. Cat. No. 71470F Schedule 3 (Form 1040) 2018 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2019 McGraw-Hill Education. 55