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Comprehensive Problem 8-84 (LO 8-1, LO 8-2, LO 8-3, LO 8-4, LO 8-5)

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[The following information applies to the questions displayed below.] Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2020. 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 on 12/31/2016). 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 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 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 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 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. Reba had qualifying insurance for purposes of the Affordable Care Act (ACA).

Age/Blindness You: Dependents (see instructions): (1) First name Were born before January 2, 1955 Are blind (2) Social security number Last name (Enter as xxx-xx-xxxx) Spouse: Was bom before January 2, 1955 Is blind (3) Relationship to you (4) if qualifies for (see instructions): Child tax credit Credit for other dependents 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 2a Tax-exempt interest 2a 2b 3a Qualified dividends 3a 3b 4a IRA distributions 4al b Taxable interest. Attach Sch. B if required b Ordinary dividends. Attach Sch. B if required b b Taxable amount d Taxable amount b b Taxable amount 4b 4d c Pensions and annuities 4c 5a Social security benefits 5a 6 Capital gain or loss). Attach Schedule D if required. If not required, check here 5b 6 7a Other income from Schedule 1, line 9 7a Standard Deduction for- Single or Married filing separately. $12,200 Married filing jointly or Qualifying widow(er) $24,400 Head of household, $18,350 If you checked any box under Standard Deduction, see instructions. 7b 0 b Add lines 1, 2b, 3b, 45, 40, 5b, 6, and 7a. This is your total income b , , , sa Adjustments to income from Schedule 1, line 22 b Subtract line Ba from line 7b. This is your adjusted gross income 8 8b 0 9 Standard deduction or itemized deductions (from Schedule A) 9 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A 10 11a 0 11a Add lines 9 and 10 Taxable income. Subtract line 11a from line 8b. If zero or less, enter-O- . O- 11b 0 Part 1 Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 1 2a Alimony received 2a b Date of original divorce or separation agreement (see instructions) 3 Business income or (loss). Attach Schedule C 3 4 Other gains or losses). Attach Form 4797 4 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 5 6 6 Farm income or (loss). Attach Schedule F Unemployment compensation 7 7 8 Other income. List type and amount 8 9 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a 9 0 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 11 12 Health savings account deduction. Attach Form 8889 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 13 14 Deductible part of self-employment tax. Attach Schedule SE 14 15 Self-employed SEP, SIMPLE, and qualified plans 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings 17 18a Alimony paid 18a b Recipient's SSN Date of original divorce or separation agreement (see instructions) 19 IRA deduction 19 20 Student loan interest deduction 20 21 Reserved for future use 21 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 1040-SR, line 8a 22 0