Required information Comprehensive Problem 8-84 (LO 8-1, LO 8-2, LO 8-3, LO 8-4, LO 8-5) 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 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 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 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 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 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 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, 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 years. This was Heather's 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). Schedule 1 of Form 1040. OMB No. 1545-0074 2018 Attachment Sequence No. 01 Your social security number 111-11-1111 1-9b 10 11 12 1,000 14,400 30,500 0 SCHEDULE 1 Additional Income and Adjustments to Income (Form 1040) Department of the Treasury Attach to Form 1040. Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name(s) shown on Form 1040 Reba Dixon Additional 1-9b Reserved Income 10 Taxable refunds, credits, or offsets of state and local income taxes 11 Alimony received 12 Business income or (loss). Attach Schedule C or C-EZ 13 Capital gain or loss). Attach Schedule D if required. If not required, check here 14 Other gains or (losses). Attach Form 4797 15a Reserved 16a Reserved 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 18 Farm income or (loss). Attach Schedule F 19 Unemployment compensation 20a Reserved 21 Other income. List type and amount 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 6. Otherwise, go to line 23 Adjustments 23 Educator expenses to Income 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 31a 32 IRA deduction 33 Student loan interest deduction 34 Reserved 19 44,900 26 28 33 Page 2 38,000 Form 1040 (2018) 1 Wages, salaries, tips, etc. Attach Form(s) W-2 Attach Form(s) W-2. Also attach Form(s) W-2G and Za lax-exempt interest 1099-R if tax was 3a Qualified dividends withheld. 4a IRAs, pensions, and annuities 5a Social security benefits Standard deduction for 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1. line 1,500 b Taxable interest b Ordinary dividends b Taxable amount b Taxable amount 5a 22 38,000 e 2 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6, otherwise, subtract Schedule 1, Single or Married filing line 36, from line 6 separately, $12,000 8 Standard deduction or itemized deductions (from Schedule A) 9 Qualified business income deduction (see instructions) 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter-O- Married filing jointly or Qualifying widow(er), 11 a Tax (see inst.) (check if any from: 1. Form(s) 8814 2. Form 4972 $24,000 3. b Add any amount from Schedule 2 and check here Head of household, 12 a Child tax credit/credit for other dependents $18,000 b Add any amount from Schedule 3 and check here 13 Subtract line 12 from line 11. If zero or less, enter-O- 14 Other taxes. Attach Schedule 4 . If you checked any box 15 Total tax. Add lines 13 and 14 under Standard deduction, see 16 Federal income tax withheld from Forms W-2 and 1099 instructions. 17 Refundable credits: a EIC (see inst.) b Sch. 8812 c Form 8863 Add any amount from Schedule 5 18 Add lines 16 and 17. These are your total payments. Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid 20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here Direct deposit? See Routing number Type: Checking Savings instructions. d Account number 21 Amount of line 19 you want applied to your 2019 estimated tax 211 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions Amount You Owe L22 23 Estimated tax penalty (see instructions) 23 Go to www.irs.gov/Form 1040 for instructions and the latest information. 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. , check here . Form 1040 (2018) Required information Comprehensive Problem 8-84 (LO 8-1, LO 8-2, LO 8-3, LO 8-4, LO 8-5) 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 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 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 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 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 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 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, 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 years. This was Heather's 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). Schedule 1 of Form 1040. OMB No. 1545-0074 2018 Attachment Sequence No. 01 Your social security number 111-11-1111 1-9b 10 11 12 1,000 14,400 30,500 0 SCHEDULE 1 Additional Income and Adjustments to Income (Form 1040) Department of the Treasury Attach to Form 1040. Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name(s) shown on Form 1040 Reba Dixon Additional 1-9b Reserved Income 10 Taxable refunds, credits, or offsets of state and local income taxes 11 Alimony received 12 Business income or (loss). Attach Schedule C or C-EZ 13 Capital gain or loss). Attach Schedule D if required. If not required, check here 14 Other gains or (losses). Attach Form 4797 15a Reserved 16a Reserved 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 18 Farm income or (loss). Attach Schedule F 19 Unemployment compensation 20a Reserved 21 Other income. List type and amount 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 6. Otherwise, go to line 23 Adjustments 23 Educator expenses to Income 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 31a 32 IRA deduction 33 Student loan interest deduction 34 Reserved 19 44,900 26 28 33 Page 2 38,000 Form 1040 (2018) 1 Wages, salaries, tips, etc. Attach Form(s) W-2 Attach Form(s) W-2. Also attach Form(s) W-2G and Za lax-exempt interest 1099-R if tax was 3a Qualified dividends withheld. 4a IRAs, pensions, and annuities 5a Social security benefits Standard deduction for 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1. line 1,500 b Taxable interest b Ordinary dividends b Taxable amount b Taxable amount 5a 22 38,000 e 2 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6, otherwise, subtract Schedule 1, Single or Married filing line 36, from line 6 separately, $12,000 8 Standard deduction or itemized deductions (from Schedule A) 9 Qualified business income deduction (see instructions) 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter-O- Married filing jointly or Qualifying widow(er), 11 a Tax (see inst.) (check if any from: 1. Form(s) 8814 2. Form 4972 $24,000 3. b Add any amount from Schedule 2 and check here Head of household, 12 a Child tax credit/credit for other dependents $18,000 b Add any amount from Schedule 3 and check here 13 Subtract line 12 from line 11. If zero or less, enter-O- 14 Other taxes. Attach Schedule 4 . If you checked any box 15 Total tax. Add lines 13 and 14 under Standard deduction, see 16 Federal income tax withheld from Forms W-2 and 1099 instructions. 17 Refundable credits: a EIC (see inst.) b Sch. 8812 c Form 8863 Add any amount from Schedule 5 18 Add lines 16 and 17. These are your total payments. Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid 20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here Direct deposit? See Routing number Type: Checking Savings instructions. d Account number 21 Amount of line 19 you want applied to your 2019 estimated tax 211 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions Amount You Owe L22 23 Estimated tax penalty (see instructions) 23 Go to www.irs.gov/Form 1040 for instructions and the latest information. 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. , check here . Form 1040 (2018)