Reba Dixon is a fifth-grade schoolteacher who earned a salary of $38,000 in 2021. She is 45 years old and has been divorced for four
Reba Dixon is a fifth-grade schoolteacher who earned a salary of $38,000 in 2021. 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 year 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 Heathers 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 wasnt 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 qualify 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 | $7,952 |
| Medical care expenses | 1,100 |
| Prescription medicine | 350 |
| Nonprescription medicine | 100 |
| New contact lenses for Heather | 200 |
Shortly after the move, Reba got distracted while driving and 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 wasnt able to work for two months after the accident. Fortunately, she received $2,000 from her disability insurance. Her employer, 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, Rebas 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 years. This was Heathers only source of income for the year.
Reba 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. Assume Reba received the correct advance payment for her 2021 individual recovery credit.
Required:
- Determine Rebas federal income taxes due or taxes payable for the current year. Complete pages 1 and 2, Schedule 1, and Schedule 3 of Form 1040 for Reba.
- Is Reba allowed to file as a head of household or single?
- Determine the amount of FICA taxes Reba was required to pay on her salary.
- Determine Heathers federal income taxes due or payable.
FORM 1040:
1040 2020 C VO $18,650 HBub Department of the Treasury - Internal Revenue Service U.S. Individual Income Tax Return OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space Filing Status Single Married filing jointly Married filing separately (MFS) X Head of household (HOH) Qualifying widow(er) (QW) ) Check only If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying one box. person is a child but not your dependent Your first name and middle initial Last name Your social security number Reba Dixon x x x x x x x If joint return, spouse's first name and middle initial Last name Spouse's social security number x x x x x x x Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign 1234 City Park Way Check here if you, or your City, town, or post office. If you have a foreign address, also complete spaces below. State ZIP cexdo spouse if filing jointly, want $3 to go to this fund. Checking a Ficticious City Unk 12345 box below will not change Foreign country name Foreign province/state/county Foreign postal code your tax or refund. You Spouse At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes x No Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You Were born before January 2, 1956 Are blind Spouse: Was born before January 2, 1956 Is blind Dependents (see instructions): (2) Social security (3) Relationship (4) Vif qualifies for (see instructions): (1) First name number If more 1) Last name to you Child tax credit Credit for other dependents than four U dependents, U U see instructions and check here) 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 Attach 2a Tax-exempt interest 2a b Taxable interest 2b Sch. Bif 3a Qualified dividends 3a required. 3b . b Ordinary dividends 4a IRA distributions. 4a b Taxable amount 4b 5a Pensions and annuities 5a b Taxable amount 5b Standard 6a Social security benefits 6 b Taxable amount 6b Deduction for 7 Capital gain or (loss). Attach Schedule D if required. If not required, check here 7 Single or Married filing 8 Other income from Schedule 1, line 9 8 separately. 9 9 Add lines 1, 2, 3, 4, 5b, 66, 7, and 8. This is your total income 9 $12,400 Married filing 10 Adjustments to income: jointly or Qualifying a From Schedule 1, line 22 .. 10a widow(er). 10b $24,800 b Charitable contributions if you take the standard deduction. See instructions Head of Add lines 10a and 10b. These are your total adjustments to income 10c household, 11 Subtract line 10c from line 9. This is your adjusted gross income 11 If you checked 12 Standard deduction or itemized deductions (from Schedule A) 12 any box under Standard 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 Deduction, 14 Add lines 12 and 13. see instructions 14 . . . . . . 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-O- 15 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. , , Cat. No. 113200 . Form 1040 (2020) Form 1040 (2020) ) Page 2 16 Tax (see instructions). Check if any from Form(s): 1 8814 2 4972 30 16 17 Amount from Schedule 2, line 3 17 18 Add lines 16 and 17. 18 19 Child tax credit or credit for other dependents 19 20 Amount from Schedule 3, line 7 20 21 Add lines 19 and 20 21 22 Subtract line 21 from line 18. If zero or less, enter 0 22 23 Other taxes, including self-employment tax, from Schedule 2, line 10 23 24 Add lines 22 and 23. This is your total tax 24 25 Federal income tax withheld from: a Form(s) W-2 25a b Form(s) 1099 25b Other forms (see instructions) 25c d Add lines 25a through 250 25d 26 26 If you have 2020 estimated tax payments and amount applied from 2019 return qualifying child, 27 Earned income credit (EIC). 27 attach Sch. EIC 28 If you have 28 Additional child tax credit. Attach Schedule 8812 nontaxable 29 American opportunity credit from Form 8863, line 8 29 combat pay See instructions. 30 Recovery rebate credit. See instructions 30 31 Amount from Schedule 3, line 13 , 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 33 Add lines 25d, 26, and 32. These are your total payments 33 Refund 34 34 If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid 35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here 35a Direct deposit? b Routing number c Type: Checking Savings See instructions Account number 36 Amount of line 34 you want applied to your 2021 estimated tax . 36 Amount 37 Subtract line 33 from line 24. This is the amount you owe now 37 You Owe Note: Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for For details on how to pay, see 2020. See Schedule 3, line 12e, and its instructions for details. instructions. 38 Estimated tax penalty (see instructions) 38 Third Party Do you want to allow another person to discuss this return with the IRS? See Designee instructions ... Yes. Complete below. No . Designee's Phone Personal identification no. number (PIN) Sign Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Here Your signature Date Your occupation If the IRS sent you an identity Protection PIN, enter it here Joint return? ? (see inst.) See instructions. Spouse's signature. If a joint return, both must sign. Date . Spouse's occupation If the IRS sent your spouse an Keep a copy for Identity Protection PIN, enter it here your records. . see inst.) Phone no. Email address Preparer's name Preparer's signature Date PTIN Check it: Paid Self-employed Preparer Firm's name Phone no. Use Only Firm's address Firm's EIN Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2020) name 1040 2020 C VO $18,650 HBub Department of the Treasury - Internal Revenue Service U.S. Individual Income Tax Return OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space Filing Status Single Married filing jointly Married filing separately (MFS) X Head of household (HOH) Qualifying widow(er) (QW) ) Check only If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying one box. person is a child but not your dependent Your first name and middle initial Last name Your social security number Reba Dixon x x x x x x x If joint return, spouse's first name and middle initial Last name Spouse's social security number x x x x x x x Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign 1234 City Park Way Check here if you, or your City, town, or post office. If you have a foreign address, also complete spaces below. State ZIP cexdo spouse if filing jointly, want $3 to go to this fund. Checking a Ficticious City Unk 12345 box below will not change Foreign country name Foreign province/state/county Foreign postal code your tax or refund. You Spouse At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes x No Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You Were born before January 2, 1956 Are blind Spouse: Was born before January 2, 1956 Is blind Dependents (see instructions): (2) Social security (3) Relationship (4) Vif qualifies for (see instructions): (1) First name number If more 1) Last name to you Child tax credit Credit for other dependents than four U dependents, U U see instructions and check here) 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 Attach 2a Tax-exempt interest 2a b Taxable interest 2b Sch. Bif 3a Qualified dividends 3a required. 3b . b Ordinary dividends 4a IRA distributions. 4a b Taxable amount 4b 5a Pensions and annuities 5a b Taxable amount 5b Standard 6a Social security benefits 6 b Taxable amount 6b Deduction for 7 Capital gain or (loss). Attach Schedule D if required. If not required, check here 7 Single or Married filing 8 Other income from Schedule 1, line 9 8 separately. 9 9 Add lines 1, 2, 3, 4, 5b, 66, 7, and 8. This is your total income 9 $12,400 Married filing 10 Adjustments to income: jointly or Qualifying a From Schedule 1, line 22 .. 10a widow(er). 10b $24,800 b Charitable contributions if you take the standard deduction. See instructions Head of Add lines 10a and 10b. These are your total adjustments to income 10c household, 11 Subtract line 10c from line 9. This is your adjusted gross income 11 If you checked 12 Standard deduction or itemized deductions (from Schedule A) 12 any box under Standard 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 Deduction, 14 Add lines 12 and 13. see instructions 14 . . . . . . 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-O- 15 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. , , Cat. No. 113200 . Form 1040 (2020) Form 1040 (2020) ) Page 2 16 Tax (see instructions). Check if any from Form(s): 1 8814 2 4972 30 16 17 Amount from Schedule 2, line 3 17 18 Add lines 16 and 17. 18 19 Child tax credit or credit for other dependents 19 20 Amount from Schedule 3, line 7 20 21 Add lines 19 and 20 21 22 Subtract line 21 from line 18. If zero or less, enter 0 22 23 Other taxes, including self-employment tax, from Schedule 2, line 10 23 24 Add lines 22 and 23. This is your total tax 24 25 Federal income tax withheld from: a Form(s) W-2 25a b Form(s) 1099 25b Other forms (see instructions) 25c d Add lines 25a through 250 25d 26 26 If you have 2020 estimated tax payments and amount applied from 2019 return qualifying child, 27 Earned income credit (EIC). 27 attach Sch. EIC 28 If you have 28 Additional child tax credit. Attach Schedule 8812 nontaxable 29 American opportunity credit from Form 8863, line 8 29 combat pay See instructions. 30 Recovery rebate credit. See instructions 30 31 Amount from Schedule 3, line 13 , 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 33 Add lines 25d, 26, and 32. These are your total payments 33 Refund 34 34 If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid 35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here 35a Direct deposit? b Routing number c Type: Checking Savings See instructions Account number 36 Amount of line 34 you want applied to your 2021 estimated tax . 36 Amount 37 Subtract line 33 from line 24. This is the amount you owe now 37 You Owe Note: Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for For details on how to pay, see 2020. See Schedule 3, line 12e, and its instructions for details. instructions. 38 Estimated tax penalty (see instructions) 38 Third Party Do you want to allow another person to discuss this return with the IRS? See Designee instructions ... Yes. Complete below. No . Designee's Phone Personal identification no. number (PIN) Sign Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Here Your signature Date Your occupation If the IRS sent you an identity Protection PIN, enter it here Joint return? ? (see inst.) See instructions. Spouse's signature. If a joint return, both must sign. Date . Spouse's occupation If the IRS sent your spouse an Keep a copy for Identity Protection PIN, enter it here your records. . see inst.) Phone no. Email address Preparer's name Preparer's signature Date PTIN Check it: Paid Self-employed Preparer Firm's name Phone no. Use Only Firm's address Firm's EIN Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2020) name
