Review your return for Caitlyn. You can make any updates you would like from your original submission. If you make changes, please upload a new return for my reference. Write a memo to Caitlyn explaining her taxable income and liability for the current year. Be sure to address the following matters in a professional manner; professionalism (including grammar) is 10% of your grade: Summarize and explain her return. Be sure to reference at least five of the forms below- how does that form either impacted her 1040, her taxable income, or her refund/amount owed. When writing be sure to ask yourself what would you want to know if you were her? Do not use a list. 1040 Schedule 1 Schedule 2 Schedule 3 Schedule A Schedule B Schedule c Schedule SE Schedule D Form 8949 Form 4562 Explain her current year filing status and if it will change next year; why or why won't it Discuss her standard deduction - explain to her why her standard deduction was used and how much more she would have had to spend to use her itemized deduction. If the taxpayer spent that much more; what tax benefit would it give her? Is it worth it? Assuming her itemized deductions total will be consistent year-over year, can she expect to itemize or use the standard deduction next year? Give her 4 reasons her tax liability most likely will change next year - be specific to what is going on in her life, family, and business - will those factors increase or decrease her liability? Do not focus on "if this then that will happen", but focus on definitive facts. o Caitlyn has heard about education credits. Please explain the different options and which one she qualified for; if she did not qualify for any, please explain why. She organized her business as a sole proprietor, but she wants to know if she could maintain that business entity or should change it. Please give your professional opinion as to what business entity she should use. How will this impact her tax entity and tax liability? Explain your opinion. Do you have recommendations as to how much her estimated tax payments should be this coming year? In 2020, Caitlyn Smith's husband Ben passed away. The next year she moved from Louisiana to Texas. Caitlyn (born 1/12/1976) has not remarried as of the end of 2022 and currently lives in Portland, TX with her three children (ages as of the end of the year): Elizabeth (born 7/6/1999), Joshua (6/22/2006), and Anthony (born 3/21/2013). Caitlyn would like to determine her federal income tax under the filing status that is most advantageous for her. Caitlyn reported the following information: Caitlyn's social security number is 194-38-XXXX (use last 4 digits of your A-number) Elizabeth's social security number is 842-48-5684 Joshua's social security number is 842-43-8495 Anthony's social security number is 842-65-8429 Caitlyn's mailing address is 23 Freedom Road Portland, Texas, 78374 Elizabeth is single and enrolled as a full-time graduate student at TAMUCC (EIN 33-9654387). TAMUCC's address is 6300 Ocean Dr., Corpus Christi, TX. 78412. She completed her bachelor's degree in 2021 and is in her fifth year of full-time higher education schooling. While at school, Elizabeth works part-time at TAMUCC to help with her living expenses earning $3,500. Caitlyn paid for Elizabeth's rent, books, tuition, food, clothes, medicine, and other support items which totaled over $16,800 of support for the year. TAMUCC provided Elizabeth with a Form 1098-T at year end. Caitlin had to take out a loan to pay for Elizabeth's tuition. She paid $2,000 in interest this year. Elizabeth's higher education expenses for her university studies were as follows: Tuition Books $9,500 $2,000 To maintain a full-time job, Anthony attends a day care program after school five days a week and Caitlin pays $6,000 for his care. The day care details are as follows: Legacy Preschool 902 Moore Ave Portland, TX EIN: 34-8324659 Caitlyn began the year working for the Workforce Commission; here is the information from her W-2: Employer Workforce Commission Gross Wages $22,500 Federal Income Tax Withholding $2,250 Caitlyn's employers withheld all applicable and appropriate payroll taxes. After getting her real estate and brokerage license in 2020, Caitlyn started a side real estate business in January 2021 (the prior year). It really took off in 2022 and she was able to quit her old job and focus on her new career. The name of her business is "Caitlyn Smith Realty" and it is located at 1702 US-181 Suite B-6, Portland, TX 78374. She's hoping to hire some employees this coming year and has been assigned an employer identification number of 93-3488885. Her gross receipts during the year were 85,000. Caitlyn uses the cash method of accounting for her business. Her business expenses are as follows: Advertising Professional License Professional Journals Insurance on office contents Accounting Services Miscellaneous office expense Utilities and telephone Depreciation $ 8,000 500 80 7,500 600 825 3,000 To be calculated The insurance was paid on August 1.2022 for two years of coverage. When she quit her job with the Workforce Commission on July 31st, she had to purchase her own health insurance for the rest of the year. She paid $12,000 for her and her children to cover the rest of the year. Caitlyn recorded the following qualified business miles as she drove between clients and home showings; she drove her car for a total of 9,000 miles in 2022: January 425 February 420 March 400 April 475 May 480 June 550 July 580 August 565 September 475 October 425 November 380 December 275 To focus on her real estate business, she had to buy office space. Caitlyn's expenditures for the new office building are as follows: Date Acquired Asset 7/20/2022 Land 7/20/2022 Office building 7/20/2022 8/1/2022 Furniture Computer System Cost 120,000 60,000 12,000 5,000 Caitlyn computes his cost recovery allowance using MACRS. She would like to use the Sect. 179 immediate expensing, but she has elected to not claim bonus depreciation. Caitlyn bought a computer January 15, 2021 for her business at a cost of $3,000. She did not election Section 179 or bonus depreciation last year. Caitlyn sold a couple of stocks she had been holding in order to invest in her company. The sales were reported on form 1099-B to her and their basis was reported to the IRS. She did not direct her broker to sell specific shares of stock. Here is what Caitlyn owned at the beginning of 2022: Asset Date Purchased Purchase Price Broker's commission Paid at Time of 300 shares of Mohawk Industries Stock 6/22/2018 $ 12,000 400 shares of TXU stock 11/12/2021 15,250 Purchase $ 500 500 Here is what she sold: Asset Date Sold Sales Price Broker's commission Paid at Time of Sale 300 shares of Mohawk 6/01/2022 $ 27,000 $ 500 Industries Stock 400 shares of TXU stock 6/01/2022 12,000 500 Caitlyn also received the following amounts in 2022: Life Insurance Payment-Mutual Life (Father's passing) Cash gift from her mom Interest income-First Bank of Portland $200,000 $ 12,000 650 Interest income-GE Bond $ 4,700 Interest income-G-PISD Municipal Bond $ 3,500 Interest income-San Pat County Improvement District Bond 800 Interest on a US Treasury bill $ 300 Qualified dividends on TXU stock 250 Bunco winnings from a game night with friends $ 500 LA state income tax refund* 250 Refund was from state tax she paid last year. Caitlyn deducted all her state taxes as itemized deductions, and her itemized deductions totaled $25,255 on her prior year federal tax return. Additionally, Caitlin won a silent auction supporting her children's tennis team. She won a catered dinner for 12 from Hudat. The dinner would typically cost her $250 but she won it for $175. Copyright 2000 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Caitlyn made the following payments during 2022: Dentist (unreimbursed by insurance) Doctors (unreimbursed by insurance) Prescriptions (unreimbursed by Insurance) Real property taxes on residence Vehicle registration fee based upon age of vehicle Mortgage interest on principal residence (Form 1098 received) Interest on Mastercard credit card Cash contribution to the American Cancer Society Cash contribution to the United Way Cash contribution to First Baptist Church Corpus Christi Cash contribution to Baylor University $1,900 $ 800 $ 200 $7,900 $135 $6,600 $4,800 $ 715 $ 825 $4,200 $ 250 All charitable donations were made on December 15th. Texas does not have state income tax, but Caitlyn heard something about being able to deduct her sales tax even if she does not have her receipts. All charitable donations were made on December 15th. Texas does not have state income tax, but Caitlyn heard something about being able to deduct her sales tax even if she does not have her receipts. Caitlyn made estimated quarterly tax payments on time -$3,500 (each) during 2022. Caitlyn wants to contribute to the Presidential Election Campaign Fund. She would like to receive a refund (if any) of any tax she may have overpaid for the year. Her preferred method of receiving the refund is by check. Instructions (each requirement is worth one half of your overall grade on this assignment): 1. Use TaxSlayer to complete the 2022 federal income tax return for Caitlyn Smith. If required Information is missing, use reasonable assumptions to fill in the gaps. 2. Upload an excel file with three calculations-her tax liability (line 16 on the 1040), her self- employment tax, and current year depreciation. Label your calculations so I can see how you calculated it without opening excel or clicking on a cell. Be sure to use cell references in your calculations. Be sure to have all tables fit across one page when printed. Remember, your calculated tax liability may be off a couple of dollars from the 1040 because you are manually calculating vs the software using a table.