Richard McCarthy (born 2/14/1965; Social Security number 100-10-9090) and Christine McCarthy (born 6/1/1967; Social security number 101-21- 3434) have a 19-year-old son (born 10/2/2000 Social Security number 555-55-1212), Jack who is a full-time student at the University of Key West. The McCarthys also have a 12-year-old daughter (Social Security number 444-23-1212), Justine, that lives with them. The McCarthys can claim a $2,000 child tax credit for Justine and a $500 other dependent credit for Jack. Richard is the CEO at a paper company. His Form W-2 is provided. Christine is an optometrist and operates her own practice ("The Eyes of March") in town as a sole proprietor. The shop address is 1030 Morgan Highway, Clarks Summit, PA 18411 and the business code is 621320. Christine keeps her books on the accrual basis and her bookkeeper provided the following information: Gross sales $270,541 8,994 Returns $24,000 120,000 30,000 Inventory: Beginning inventory Purchases Ending inventory Rent Insurance Professional fees Payroll Payroll taxes 24,000 11,019 2,998 37,113 2,877 Utilities 3,961 Office expenses 1,995 Depreciation 5,000 The McCarthys have a nanny/housekeeper they paid $12,600 during 2019. They did not withhold income or FICA taxes. The McCarthys paid Pennsylvania state unemployment tax of $378 in 2019. Christine received a 2019 Form 1099-INT from the National Bank of Scranton that listed interest income of $23,467. Note that McCarthys reasonably allocate $761 to state income tax expense for purposes of the Net Investment Income tax. Christine received a 2019 Form 1099-INT from the National Bank of Scranton that listed interest income of $23,467. Note that McCarthys reasonably allocate $761 to state income tax expense for purposes of the Net Investment Income tax. The McCarthys received a Form 1099-G from Pennsylvania that reported a $451 state income tax refund from 2018. The McCarthys itemized deductions in 2018 and had $14,223 of state income tax expense that was limited to $10,000. The McCarthys paid the following in 2019: $15,661 5,436 Home mortgage interest Property taxes Estimated state income tax payments Estimated Federal income tax payments Charitable contributions (all cash) 2,400 10,500 7,600 Required: Complete the McCarthys' federal tax return for 2019. Use Form 1040, Schedule 1, Schedule 2, Schedule 3, Schedule A, Schedule B, Schedule C, Schedule H, Schedule SE, Form 8959, and Form 8960 to complete this tax return. Form Department of the Treasury - Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2019 OMB No. 1545-0074 IRS Use Only Filing Status Married filing jointly If you checked the MFS box, enter the name of spouse. If you checked the HOH or QW box, enter the child's name if the qualifying person is a child but not your dependent. Your first name and middle initial Last name Your social security number Richard McCarthy 100-10-9090 Last name If joint return, spouse's first name and middle initial Spouse's social security McCarthy number Christine 101-21-3434 Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election 32 Sleepy Hollow Road Campaign Check here if you, or your spouse City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below if filing jointly, want $3 to go to (see instructions). this fund. Checking a box below Clarks Summit, PA 18411 will not change your tax or refund. None Foreign country name Foreign province/state/county Foreign postal code If more than four dependents, see instructions and here Standard Someone can claim: None Deduction You: None Age/Blindness Spouse: None Dependents (see instructions): (2) Social security number (3) Relationship to you (4) Vif qualifies for (see instructions): (1) First name Last name Child tax credit Credit for other dependents Jack McCarthy 555-55-1212 No Yes Justine McCarthy 444-23-1212 Daughter Yes No Son Part II 8 18 19 10 20a 11 20b 12 21 22 22 23 23 13 24a 14 Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising 18 Office expense (see instructions). 9 Car and truck expenses (see 19 Pension and profit-sharing plans... instructions) ... 9 20 Rent or lease (see instructions): 10 Commissions and fees a Vehicles, machinery, and equipment 11 Contract labor (see instructions) b Other business property 12 Depletion... 21 Repairs and maintenance ... 13 Depreciation and section 179 Supplies (not included in Part III). expense deduction (not included Taxes and licenses.. in Part III) (see instructions)... 24 Travel and meals: 14 Employee benefit programs a Travel (other than on line 19)...... b Deductible meals (see 15 Insurance (other than health).. instructions) 16 Interest (see instructions): Utilities a Mortgage (paid to banks, etc.).. 16a Wages (less employment credits)... b Other ... 16b 27a Other expenses (from line 48)..... 17 Legal and professional services b Reserved for future use 28 Total expenses before expenses for business use of home. Add lines 8 through 27a. 29 Tentative profit or loss). Subtract line 28 from line 7. 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30.... 15 24b 25 25 26 26 27a 17 27b 28 29 30 30 31 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 3829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: . Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30... 31 Net profit or loss). Subtract line 30 from line 29. If a profit, enter on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. . If a loss, you must go to line 32. } 32 If you have a loss, check the box that describes your investment in this activity (see instructions). . If you checked 32a, enter the loss on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 32a - All investment is at 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 risk. instructions). Estates and trusts, enter on Form 1041, line 3. 32b - Some investment . If you checked 32b, you must attach Form 6198. Your loss may be limited. is not at risk. For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040 or 1040-SR) 2019 101-21-3434 Page 2 Schedule C (Form 1040 or 1040-SR) 2019 Christine McCarthy Part III Cost of Goods Sold (see instructions) a Cost Yes No 33 Method(s) used to value closing inventory: b Lower of cost or market Other (attach explanation) 34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation ..... 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation 36 Purchases less cost of items withdrawn for personal use 37 Cost of labor. Do not include any amounts paid to yourself. 38 Materials and supplies.. 35 36 37 38 39 Other costs 39 39 Other costs 39 40 41 40 Add lines 35 through 39 41 Inventory at end of year 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4. Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562. 42 43 44 a C Other 45 When did you place your vehicle in service for business purposes? (month, day, year) of the total number of miles you drove your vehicle during 2019, enter the number of miles you used your vehicle for: Business b Commuting (see instructions) Was your vehicle available for personal use during off-duty hours?. 46 Do you (or your spouse) have another vehicle available for personal use? 47a Do you have evidence to support your deduction? b If "Yes," is the evidence written? Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. Yes No Yes No Yes No Yes No 48 Total other expenses. Enter here and on line 27a 48 Schedule C (Form 1040 or 1040-SR) 2019 SCHEDULE H OMB No. 1545-1971 (Form 1040 or 1040-SR) Household Employment Taxes 2019 (For Social Security, Medicare, Withheld Income, and Federal Unemployment (FUTA) Taxes) Department of the Treasury Attach to Form 1040, 1040-SR, 1040-NR, 1040-ss, or 1041. Internal Revenue Service Attachment (99) Go to www.irs.gov/Schedule for instructions and the latest information. Sequence No. 44 Name of employer Social security number Richard and Christine McCarthy 100-10-9090 Employer Identification number Calendar year taxpayers having no household employees in 2019 don't have to complete this form for 2019. A Did you pay any one household employee cash wages of $2,100 or more in 2019? (If any household employee was your spouse, your child under age 21, your parent, or anyone under age 18, see the line A instructions before you answer this question.) Yes. Skip lines B and C and go to line 1. No. Go to line B. B Did you withhold federal income tax during 2019 for any household employee? Yes. Skip line C and go to line 7. No. Go to line c. C Did you pay total cash wages of $1,000 or more in any calendar quarter of 2018 or 2019 to all household employees? (Don't count cash wages paid in 2018 or 2019 to your spouse, your child under age 21, or your parent.) No. Stop. Don't file this schedule. Yes. Skip lines 1-9 and go to line 10. Part I Social Security, Medicare, and Federal Income Taxes 1 Total cash wages subject to social security tax. 230,500 x Social security tax. Multiply line 1 by 12.4% (0.124) 16,480 x Total cash wages subject to Medicare tax. Medicare tax. Multiply line 3 by 2.9% (0.029). Total cash wages subject to Additional Medicare Tax withholding. Additional Medicare Tax withholding. Multiply line 5 by 0.9% (0.009). Federal income tax withheld, if any. Total social security, Medicare, and federal income taxes. Add lines 2, 4, 6, and 7. 1 2 N 3 3 4 4 5 5 6 6 7 7 8 8 11 12 Part II Federal Unemployment (FUTA) Tax 10 Did you pay unemployment contributions to only one state? If you paid contributions to a credit reduction state, see instructions and check "No.". 10 Yes 11 Did you pay all state unemployment contributions for 2019 by April 15, 2020? Fiscal year filers, see instructions Yes 12 were all wages that are taxable for FUTA tax also taxable for your state's unemployment tax? Yes Next: If you checked the "Yes" box on all the lines above, complete Section A. If you checked the "No" box on any of the lines above, skip Section A and complete Section B. Section A 13 Name of the state where you paid unemployment contributions Pennsylvania 14 Contributions paid to your state unemployment fund 15 Total cash wages subject to FUTA tax. 16 FUTA tax. Multiply line 15 by 0.6% (0.006). Enter the result here, skip Section B, and go to line 25 Section B 17 Complete all columns below that apply (if you need more options, see instructions): (a) (b) (d) (f) (9) (h) Name of state Taxable wages State experience State Multiply col. (b) Multiply col. (b) Subtract col. (f) Contributions (as defined in rate period experience rate by 0.054 by col. (d) from col. (e). If paid to state state act) zero or less, unemployment enter-O- 14 15 16 From fund 18 Totals. 18 20 21 22 19 Add columns (9) and (h) of line 18. | 19 | 20 Total cash wages subject to FUTA tax (see the line 15 instructions). 21 Multiply line 20 by 6.0% (0.060). 22 Multiply line 20 by 5.4% (0.054). 23 Enter the smaller of line 19 or line 22.. (If you paid state unemployment contributions late or you're in a credit reduction state, see instructions and check here)... 24 FUTA tax. Subtract line 23 from line 21. Enter the result here and go to line 25 23 1 24 25 26 Part III Total Household Employment Taxes 25 Enter the amount from line 8. If you checked the "Yes" box on line C of page 1, enter-O- 26 Add line 16 (or line 24) and line 25.... 27 Are you required to file Form 1040 or 1040-SR? Yes. Stop. Include the amount from line 26 above on Schedule 2 (Form 1040 or 1040-SR), line 7a. Don't complete Part IV below. No. You may have to complete Part IV. See instructions for details. Part IV Address and Signature - Complete this part only if required. See the line 27 instructions. Address (number and street) or P.O. box if mail isn't delivered to street address Apt., room, or suite no. City, town or post office, state, and ZIP code Under penalties of perjury, I declare that I have examined this schedule, including accompanying statements, and to the best of my knowledge and belief, it is true, correct, and complete. No part of any payment made to a state unemployment fund claimed as a credit was, or is to be, deducted from the payments to employees. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Date Preparer's signature Date PTIN Your signature Paid Print/Type preparer's name Preparer Firm's name Use Only Firm's address Check if self- employed Firm's EIN Phone no. Schedule H (Form 1040 or 1040-SR) 2019 OMB No. 1545-0074 SCHEDULE SE (Form 1040 or 1040-SR) Self-Employment Tax 2019 Attachment Sequence No. 17 Department of the Treasury Go to www.irs.gov/ ScheduleSE for instructions and the latest information. Internal Revenue Service (99) Attach to Form 1040, 1040-SR, or 1040-NR. Name of person with self-employment income (as shown on Form 1040, Social security number of person 1040-SR, or 1040-NR) with self-employment income Christine McCarthy Before you begin: To determine if you must file Schedule SE, see the instructions. May I Use Short Schedule SE or Must I Use Long Schedule SE? 101-21-3434 Note: Use this flowchart only if you must file Schedule SE. If unsure, see Who Must File Schedule SE in the instructions. Did you receive wages or tips in 2019? No Yes Yes Yes Are you a minister, member of a religious order, or Christian Science practitioner who received IRS approval not to be taxed on earnings from these sources, but you owe self-employment tax on other earnings? No Was the total of your wages and tips subject to social security or railroad retirement (tier 1) tax plus your net earnings from self-employment more than $132,900? No Yes Yes Are you using one of the optional methods to figure your net earnings (see instructions)? Did you receive tips subject to social security or Medicare tax that you didn't report to your employer? No No Did you receive church employee income (see instructions) reported on Form W-2 of $108.28 or Yes Yes No Did you report any wages on Form 8919, Uncollected Social Security and Medicare Tax on Wages? more? No You may use Short Schedule SE below You must use Long Schedule SE on page 2 La AH.... 2 N 3 3 4 Section A-Short Schedule SE. Caution: Read above to see if you can use Short Schedule SE. 1a Net farm profit or loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A.. b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code 1b Net profit or loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). Ministers and members of religious orders, see instructions for types of income to report on this line. See instructions for other income to report Combine lines 1a, 1b, and 2...... 4 Multiply line 3 by 92.35% (0.9235). If less than $400, you don't owe self-employment tax; don't file this schedule unless you have an amount on line 1b. Note: If line 4 is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. 5 Self-employment tax. If the amount on line 4 is: $132,900 or less, multiply line 4 by 15.3% (0.153). Enter the result here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55. . More than $132,900, multiply line 4 by 2.9% (0.029). Then, add $16,479.50 to the result. Enter the total here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55 6 Deduction for one-half of self-employment tax. Multiply line 5 by 50% (0.50). Enter the result here and on Schedule 1 (Form 1040 or 1040-SR), line 14, or Form 1040-NR, line 27.... For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. Schedule SE (Form 1040 or 1040-SR) 2019 5 6 11358Z Schedule SE (Form 1040 or 1040-SR) 2019 Attachment Sequence No. 17 Page 2 101-21-3434 1a b 2 2 1040-SR, or 1040-NR) with self-employment income Christine McCarthy Section B-Long Schedule SE Part I Self-Employment Tax Note: If your only income subject to self-employment tax is church employee income, see instructions. Also see instructions for the definition of church employee income. A If you are a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361, but you had $400 or more of other net earnings from self-employment, check here and continue with Part I.... la Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A. Note: Skip lines ia and 1b if you use the farm optional method (see instructions)... If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code AH.... 1b Net profit or loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). Ministers and members of religious orders, see instructions for types of income to report on this line. See instructions for other income to report. Note: Skip this line if you use the nonfarm optional method (see instructions)... 3 Combine lines 1a, 1b, and 2.... 4a If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3.. Note: If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here Combine lines 4a and 4b. If less than $400, stop; you don't owe self-employment tax. Exception: If less than $400 and you had church employee income, enter-O- and continue 5a Enter your church employee income from Form W-2. See instructions for definition of church employee income.. b Multiply line 5a by 92.35% (0.9235). If less than $100, enter-O- 5b Add lines 4c and Sb... Maximum amount of combined wages and self-employment earnings subject to social security tax or the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2019... 132,900 8a Total social security wages and tips (total of boxes 3 and 7 on Form(s) W- 2) and railroad retirement (tier 1) compensation. If $132,900 or more, skip lines 8b through 10, and go to line 11 3 4a 4b 4c 5a 6 6 7 7 8 Ba 8b 8c d 8d 9 9 10 11 12 13 2) and railroad retirement (tier 1) compensation. If $132,900 or more, skip lines 8b through 10, and go to line 11 b Unreported tips subject to social security tax (from Form 4137, line 10) c Wages subject to social security tax (from Form 8919, line 10). .... Add lines 8a, 8b, and 8c.... Subtract line 8d from line 7. If zero or less, enter -- here and on line 10 and go to line 11. 10 Multiply the smaller of line 6 or line 9 by 12.4% (0.124).. 11 Multiply line 6 by 2.9% (0.029).... 12 Self-employment tax. Add lines 10 and 11. Enter here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55 13 Deduction for one-half of self-employment tax. Multiply line 12 by 50% (0.50). Enter the result here and on Schedule 1 (Form 1040 or 1040-SR), line 14, or Form 1040-NR, line 27 Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income wasn't more than $8,160, or (b) your net farm profits were less than $5,891... 14 Maximum income for optional methods .... 5,440 15 Enter the smaller of: two-thirds (2/3) of gross farm income? (not less than zero) or $5,440. Also include this amount on line 4b above ... Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits were less than $5,891 and also less than 72.189% of your gross nonfarm income, and (b) you had net earnings from self- employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times..... 16 Subtract line 15 from line 14. 17 Enter the smaller of: two-thirds (2/3) of gross nonfarm income (not less than zero) or the amount on line 16. Also include this amount on line 4b above.... From Sch. F, line 9, and Sch. K-1 (Form 1065), box 14, code B. From Sch. C, line 31; and Sch. K-1 (Form 1065), box 14, code A. From Sch. F, line 34, and Sch. K-1 (Form 1065), box 14, code A From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, code C. -minus the amount you would have entered on line 1b had you not used the optional method. Schedule SE (Form 1040 or 1040-SR) 2019 14 15 16 17 1 2 Form 8959 1 N 3 4 OMB No. 1545-0074 Additional Medicare Tax If any line does not apply to you, leave it blank. See separate instructions. 2019 Department of the Treasury Attach to Form 1040, 1040-SR, 1040-NR, 1040-PR, or 1040-ss. Attachment Internal Revenue Service Go to www.irs.gov/Form8959 for instructions and the latest information. Sequence No. 71 Name(s) shown on return Your social security number Richard and Christine McCarthy 100-10-9090 Part I Additional Medicare Tax on Medicare Wages 1 Medicare wages and tips from Form W-2, box 5. If you have more than one Form W-2, enter the total of the amounts from box 5 .... 230,500 2 Unreported tips from Form 4137, line 6 3 Wages from Form 8919, line 5. 4 Add lines 1 through 3... 230,500 5 Enter the following amount for your filing status: Married filing jointly... $250,000 Married filing separately. $125,000 Single, Head of household, or Qualifying widow(er)... $200,000 250,000 6 Subtract line 5 from line 4. If the result is zero or less, enter -0..... 7 Additional Medicare Tax on Medicare wages. Multiply line 5 by 0.9% (0.009). Enter here and go to Part II 175 X Part II Additional Medicare Tax on Self-Employment Income 8 Self-employment income from Schedule SE (Form 1040 or 1040-SR), Section A, line 4, or Section B, line 6. If you had a loss, enter -- (Form 1040-PR or 1040-55 filers, see instructions.)...... 9 Enter the following amount for your filing status: Married filing jointly.. $250,000 Married filing separately $125,000 Single, Head of household, or Qualifying widow(er)... $200,000 250,000 Enter the amount from line 4... 230,500 5 6 0 7 CO 9 10 10 11 Subtract line 10 from line 9 Tf zern or less enter -n- 11 19.500 11 Subtract line 10 from line 9. If zero or less, enter-O-....... 11 19,500 12 13 14 15 16 17 12 Subtract line 11 from line 8. If the result is zero or less, enter-O-.... 13 Additional Medicare Tax on self-employment income. Multiply line 12 by 0.9% (0.009). Enter here and go to Part III Part III Additional Medicare Tax on Railroad Retirement Tax Act (RRTA) Compensation 14 Railroad retirement (RRTA) compensation and tips from Form(s) W-2, box 14 (see instructions)... 15 Enter the following amount for your filing status: Married filing jointly... $250,000 Married filing separately $125,000 Single, Head of household, or Qualifying widow(er).. $ 200,000 16 Subtract line 15 from line 14. If zero or less, enter-O- 17 Additional Medicare Tax on railroad retirement (RRTA) compensation. Multiply line 16 by 0.9% (0.009). Enter here and go to Part IV.... Part IV Total Additional Medicare Tax 18 Add lines 7, 13, and 17. Also include this amount on Schedule 2 (Form 1040 or 1040-SR), line 8 (check box a) (Form 1040-NR, 1040-PR, or 1040-ss filers, see instructions), and go to Part V Part V Withholding Reconciliation 19 Medicare tax withheld from Form W-2, box 6. If you have more than one Form W-2, enter the total of the amounts from box 6... 20 Enter the amount from line 1... 21 Multiply line 20 by 1.45% (0.0145). This is your regular Medicare tax withholding on Medicare wages 22 Subtract line 21 from line 19. This is your Additional Medicare Tax withholding on Medicare wages... 23 Additional Medicare Tax withholding on railroad retirement (RRTA) compensation from Form W-2, box 14 (see instructions) .... 24 Total Additional Medicare Tax withholding. Add lines 22 and 23. Also include this amount with federal income tax withholding on Form 1040 or 1040-SR, line 17 (Form 1040-NR, 1040-PR, or 1040-SS filers, see instructions)....... For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 59475X 18 19 20 III 21 22 23 24 Form 8959 (2019) UMID NO. 1543ZZZT Form 8960 1 3 Net Investment Income Tax- Individuals, Estates, and Trusts 2019 Department of the Treasury Attach to your tax return. Attachment Internal Revenue Service (99) ( Go to www.irs.gov/Form8960 for instructions and the latest information. Sequence No. 72 Name(s) shown on Form 1040 or Form 1041 Your social security number or EIN Richard and Christine McCarthy 100-10-9090 Part I Investment Income Section 6013(9) election (see instructions) Section 6013(h) election (see instructions) Regulations section 1.1411-10(g) election (see instructions) 1 Taxable interest (Form 1040, line 2b; or Form 1041, line 1). 230,500 X 2 Ordinary dividends (see instructions)... 2 3 Annuities from nonqualified plans (see instructions)... 4a Rental real estate, royalties, partnerships, S corporations, trusts, etc. (see instructions). 4a b Adjustment for net income or loss derived in the ordinary course of a non-section 1411 trade or business (see instructions).. 4b c Combine lines 4a and 4b... 4c Net gain or loss from disposition of property (see instructions)... 5a b Net gain or loss from disposition of property that is not subject to net investment income tax (see instructions) 5b c Adjustment from disposition of partnership interest or s corporation stock (see instructions)... 50 d d Combine lines 5a through 5c.. 5d 6 Adjustments to investment income for certain CFCs and PFICs (see instructions) 6 7 Other modifications to investment income (see instructions)... 8 Total investment income. Combine lines 1, 2, 3, 4, 5d, 6, and 7.......... 1, , 7 Part II Investment Expenses Allocable to Investment Income and Modifications 9a Investment interest expenses (see instructions) 9a b State, local, and foreign income tax (see instructions) 9b 761 5a 7 8 C Miscellaneous investment expenses (see instructions) 9c 9c 9d 19,097 X 10 12 13 14 14 15 15 16 Miscellaneous investment expenses (see instructions) d Add lines 9a, 9b, and 9c.... 10 Additional modifications (see instructions). 11 Total deductions and modifications. Add lines 9d and 10 11 Part III Tax Computation 12 Net investment income. Subtract Part II, line 11, from Part I, line 8. Individuals, complete lines 13-17. Estates and trusts, complete lines 18a-21. If zero or less, enter-O- Individuals: 13 Modified adjusted gross income (see instructions). Threshold based on filing status (see instructions) Subtract line 14 from line 13. If zero or less, enter-o- 16 Enter the smaller of line 12 or line 15 17 Net investment income tax for individuals. Multiply line 16 by 3.8% (0.038). Enter here and include on your tax return (see instructions). Estates and Trusts: 18a Net investment income (line 12 above). . b Deductions for distributions of net investment income and deductions under section 542(c) (see instructions)... 18b c Undistributed net investment income. Subtract line 18b from 18a (see instructions) .. 18c 19a Adjusted gross income (see instructions). 19a b Highest tax bracket for estates and trusts for the year (see instructions) 19b Subtract line 19b from line 19a. If zero or less, enter - - 20 Enter the smaller of line 18c or line 19c.. 21 Net investment income tax for estates and trusts. Multiply line 20 by 3.8% (0.038). Enter here and include on your tax return (see instructions) For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 59474M 17 18a 190 20 21 Form 8960 (2019) Richard McCarthy (born 2/14/1965; Social Security number 100-10-9090) and Christine McCarthy (born 6/1/1967; Social security number 101-21- 3434) have a 19-year-old son (born 10/2/2000 Social Security number 555-55-1212), Jack who is a full-time student at the University of Key West. The McCarthys also have a 12-year-old daughter (Social Security number 444-23-1212), Justine, that lives with them. The McCarthys can claim a $2,000 child tax credit for Justine and a $500 other dependent credit for Jack. Richard is the CEO at a paper company. His Form W-2 is provided. Christine is an optometrist and operates her own practice ("The Eyes of March") in town as a sole proprietor. The shop address is 1030 Morgan Highway, Clarks Summit, PA 18411 and the business code is 621320. Christine keeps her books on the accrual basis and her bookkeeper provided the following information: Gross sales $270,541 8,994 Returns $24,000 120,000 30,000 Inventory: Beginning inventory Purchases Ending inventory Rent Insurance Professional fees Payroll Payroll taxes 24,000 11,019 2,998 37,113 2,877 Utilities 3,961 Office expenses 1,995 Depreciation 5,000 The McCarthys have a nanny/housekeeper they paid $12,600 during 2019. They did not withhold income or FICA taxes. The McCarthys paid Pennsylvania state unemployment tax of $378 in 2019. Christine received a 2019 Form 1099-INT from the National Bank of Scranton that listed interest income of $23,467. Note that McCarthys reasonably allocate $761 to state income tax expense for purposes of the Net Investment Income tax. Christine received a 2019 Form 1099-INT from the National Bank of Scranton that listed interest income of $23,467. Note that McCarthys reasonably allocate $761 to state income tax expense for purposes of the Net Investment Income tax. The McCarthys received a Form 1099-G from Pennsylvania that reported a $451 state income tax refund from 2018. The McCarthys itemized deductions in 2018 and had $14,223 of state income tax expense that was limited to $10,000. The McCarthys paid the following in 2019: $15,661 5,436 Home mortgage interest Property taxes Estimated state income tax payments Estimated Federal income tax payments Charitable contributions (all cash) 2,400 10,500 7,600 Required: Complete the McCarthys' federal tax return for 2019. Use Form 1040, Schedule 1, Schedule 2, Schedule 3, Schedule A, Schedule B, Schedule C, Schedule H, Schedule SE, Form 8959, and Form 8960 to complete this tax return. Form Department of the Treasury - Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2019 OMB No. 1545-0074 IRS Use Only Filing Status Married filing jointly If you checked the MFS box, enter the name of spouse. If you checked the HOH or QW box, enter the child's name if the qualifying person is a child but not your dependent. Your first name and middle initial Last name Your social security number Richard McCarthy 100-10-9090 Last name If joint return, spouse's first name and middle initial Spouse's social security McCarthy number Christine 101-21-3434 Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election 32 Sleepy Hollow Road Campaign Check here if you, or your spouse City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below if filing jointly, want $3 to go to (see instructions). this fund. Checking a box below Clarks Summit, PA 18411 will not change your tax or refund. None Foreign country name Foreign province/state/county Foreign postal code If more than four dependents, see instructions and here Standard Someone can claim: None Deduction You: None Age/Blindness Spouse: None Dependents (see instructions): (2) Social security number (3) Relationship to you (4) Vif qualifies for (see instructions): (1) First name Last name Child tax credit Credit for other dependents Jack McCarthy 555-55-1212 No Yes Justine McCarthy 444-23-1212 Daughter Yes No Son Part II 8 18 19 10 20a 11 20b 12 21 22 22 23 23 13 24a 14 Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising 18 Office expense (see instructions). 9 Car and truck expenses (see 19 Pension and profit-sharing plans... instructions) ... 9 20 Rent or lease (see instructions): 10 Commissions and fees a Vehicles, machinery, and equipment 11 Contract labor (see instructions) b Other business property 12 Depletion... 21 Repairs and maintenance ... 13 Depreciation and section 179 Supplies (not included in Part III). expense deduction (not included Taxes and licenses.. in Part III) (see instructions)... 24 Travel and meals: 14 Employee benefit programs a Travel (other than on line 19)...... b Deductible meals (see 15 Insurance (other than health).. instructions) 16 Interest (see instructions): Utilities a Mortgage (paid to banks, etc.).. 16a Wages (less employment credits)... b Other ... 16b 27a Other expenses (from line 48)..... 17 Legal and professional services b Reserved for future use 28 Total expenses before expenses for business use of home. Add lines 8 through 27a. 29 Tentative profit or loss). Subtract line 28 from line 7. 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30.... 15 24b 25 25 26 26 27a 17 27b 28 29 30 30 31 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 3829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: . Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30... 31 Net profit or loss). Subtract line 30 from line 29. If a profit, enter on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. . If a loss, you must go to line 32. } 32 If you have a loss, check the box that describes your investment in this activity (see instructions). . If you checked 32a, enter the loss on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 32a - All investment is at 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 risk. instructions). Estates and trusts, enter on Form 1041, line 3. 32b - Some investment . If you checked 32b, you must attach Form 6198. Your loss may be limited. is not at risk. For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040 or 1040-SR) 2019 101-21-3434 Page 2 Schedule C (Form 1040 or 1040-SR) 2019 Christine McCarthy Part III Cost of Goods Sold (see instructions) a Cost Yes No 33 Method(s) used to value closing inventory: b Lower of cost or market Other (attach explanation) 34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation ..... 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation 36 Purchases less cost of items withdrawn for personal use 37 Cost of labor. Do not include any amounts paid to yourself. 38 Materials and supplies.. 35 36 37 38 39 Other costs 39 39 Other costs 39 40 41 40 Add lines 35 through 39 41 Inventory at end of year 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4. Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562. 42 43 44 a C Other 45 When did you place your vehicle in service for business purposes? (month, day, year) of the total number of miles you drove your vehicle during 2019, enter the number of miles you used your vehicle for: Business b Commuting (see instructions) Was your vehicle available for personal use during off-duty hours?. 46 Do you (or your spouse) have another vehicle available for personal use? 47a Do you have evidence to support your deduction? b If "Yes," is the evidence written? Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. Yes No Yes No Yes No Yes No 48 Total other expenses. Enter here and on line 27a 48 Schedule C (Form 1040 or 1040-SR) 2019 SCHEDULE H OMB No. 1545-1971 (Form 1040 or 1040-SR) Household Employment Taxes 2019 (For Social Security, Medicare, Withheld Income, and Federal Unemployment (FUTA) Taxes) Department of the Treasury Attach to Form 1040, 1040-SR, 1040-NR, 1040-ss, or 1041. Internal Revenue Service Attachment (99) Go to www.irs.gov/Schedule for instructions and the latest information. Sequence No. 44 Name of employer Social security number Richard and Christine McCarthy 100-10-9090 Employer Identification number Calendar year taxpayers having no household employees in 2019 don't have to complete this form for 2019. A Did you pay any one household employee cash wages of $2,100 or more in 2019? (If any household employee was your spouse, your child under age 21, your parent, or anyone under age 18, see the line A instructions before you answer this question.) Yes. Skip lines B and C and go to line 1. No. Go to line B. B Did you withhold federal income tax during 2019 for any household employee? Yes. Skip line C and go to line 7. No. Go to line c. C Did you pay total cash wages of $1,000 or more in any calendar quarter of 2018 or 2019 to all household employees? (Don't count cash wages paid in 2018 or 2019 to your spouse, your child under age 21, or your parent.) No. Stop. Don't file this schedule. Yes. Skip lines 1-9 and go to line 10. Part I Social Security, Medicare, and Federal Income Taxes 1 Total cash wages subject to social security tax. 230,500 x Social security tax. Multiply line 1 by 12.4% (0.124) 16,480 x Total cash wages subject to Medicare tax. Medicare tax. Multiply line 3 by 2.9% (0.029). Total cash wages subject to Additional Medicare Tax withholding. Additional Medicare Tax withholding. Multiply line 5 by 0.9% (0.009). Federal income tax withheld, if any. Total social security, Medicare, and federal income taxes. Add lines 2, 4, 6, and 7. 1 2 N 3 3 4 4 5 5 6 6 7 7 8 8 11 12 Part II Federal Unemployment (FUTA) Tax 10 Did you pay unemployment contributions to only one state? If you paid contributions to a credit reduction state, see instructions and check "No.". 10 Yes 11 Did you pay all state unemployment contributions for 2019 by April 15, 2020? Fiscal year filers, see instructions Yes 12 were all wages that are taxable for FUTA tax also taxable for your state's unemployment tax? Yes Next: If you checked the "Yes" box on all the lines above, complete Section A. If you checked the "No" box on any of the lines above, skip Section A and complete Section B. Section A 13 Name of the state where you paid unemployment contributions Pennsylvania 14 Contributions paid to your state unemployment fund 15 Total cash wages subject to FUTA tax. 16 FUTA tax. Multiply line 15 by 0.6% (0.006). Enter the result here, skip Section B, and go to line 25 Section B 17 Complete all columns below that apply (if you need more options, see instructions): (a) (b) (d) (f) (9) (h) Name of state Taxable wages State experience State Multiply col. (b) Multiply col. (b) Subtract col. (f) Contributions (as defined in rate period experience rate by 0.054 by col. (d) from col. (e). If paid to state state act) zero or less, unemployment enter-O- 14 15 16 From fund 18 Totals. 18 20 21 22 19 Add columns (9) and (h) of line 18. | 19 | 20 Total cash wages subject to FUTA tax (see the line 15 instructions). 21 Multiply line 20 by 6.0% (0.060). 22 Multiply line 20 by 5.4% (0.054). 23 Enter the smaller of line 19 or line 22.. (If you paid state unemployment contributions late or you're in a credit reduction state, see instructions and check here)... 24 FUTA tax. Subtract line 23 from line 21. Enter the result here and go to line 25 23 1 24 25 26 Part III Total Household Employment Taxes 25 Enter the amount from line 8. If you checked the "Yes" box on line C of page 1, enter-O- 26 Add line 16 (or line 24) and line 25.... 27 Are you required to file Form 1040 or 1040-SR? Yes. Stop. Include the amount from line 26 above on Schedule 2 (Form 1040 or 1040-SR), line 7a. Don't complete Part IV below. No. You may have to complete Part IV. See instructions for details. Part IV Address and Signature - Complete this part only if required. See the line 27 instructions. Address (number and street) or P.O. box if mail isn't delivered to street address Apt., room, or suite no. City, town or post office, state, and ZIP code Under penalties of perjury, I declare that I have examined this schedule, including accompanying statements, and to the best of my knowledge and belief, it is true, correct, and complete. No part of any payment made to a state unemployment fund claimed as a credit was, or is to be, deducted from the payments to employees. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Date Preparer's signature Date PTIN Your signature Paid Print/Type preparer's name Preparer Firm's name Use Only Firm's address Check if self- employed Firm's EIN Phone no. Schedule H (Form 1040 or 1040-SR) 2019 OMB No. 1545-0074 SCHEDULE SE (Form 1040 or 1040-SR) Self-Employment Tax 2019 Attachment Sequence No. 17 Department of the Treasury Go to www.irs.gov/ ScheduleSE for instructions and the latest information. Internal Revenue Service (99) Attach to Form 1040, 1040-SR, or 1040-NR. Name of person with self-employment income (as shown on Form 1040, Social security number of person 1040-SR, or 1040-NR) with self-employment income Christine McCarthy Before you begin: To determine if you must file Schedule SE, see the instructions. May I Use Short Schedule SE or Must I Use Long Schedule SE? 101-21-3434 Note: Use this flowchart only if you must file Schedule SE. If unsure, see Who Must File Schedule SE in the instructions. Did you receive wages or tips in 2019? No Yes Yes Yes Are you a minister, member of a religious order, or Christian Science practitioner who received IRS approval not to be taxed on earnings from these sources, but you owe self-employment tax on other earnings? No Was the total of your wages and tips subject to social security or railroad retirement (tier 1) tax plus your net earnings from self-employment more than $132,900? No Yes Yes Are you using one of the optional methods to figure your net earnings (see instructions)? Did you receive tips subject to social security or Medicare tax that you didn't report to your employer? No No Did you receive church employee income (see instructions) reported on Form W-2 of $108.28 or Yes Yes No Did you report any wages on Form 8919, Uncollected Social Security and Medicare Tax on Wages? more? No You may use Short Schedule SE below You must use Long Schedule SE on page 2 La AH.... 2 N 3 3 4 Section A-Short Schedule SE. Caution: Read above to see if you can use Short Schedule SE. 1a Net farm profit or loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A.. b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code 1b Net profit or loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). Ministers and members of religious orders, see instructions for types of income to report on this line. See instructions for other income to report Combine lines 1a, 1b, and 2...... 4 Multiply line 3 by 92.35% (0.9235). If less than $400, you don't owe self-employment tax; don't file this schedule unless you have an amount on line 1b. Note: If line 4 is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. 5 Self-employment tax. If the amount on line 4 is: $132,900 or less, multiply line 4 by 15.3% (0.153). Enter the result here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55. . More than $132,900, multiply line 4 by 2.9% (0.029). Then, add $16,479.50 to the result. Enter the total here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55 6 Deduction for one-half of self-employment tax. Multiply line 5 by 50% (0.50). Enter the result here and on Schedule 1 (Form 1040 or 1040-SR), line 14, or Form 1040-NR, line 27.... For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. Schedule SE (Form 1040 or 1040-SR) 2019 5 6 11358Z Schedule SE (Form 1040 or 1040-SR) 2019 Attachment Sequence No. 17 Page 2 101-21-3434 1a b 2 2 1040-SR, or 1040-NR) with self-employment income Christine McCarthy Section B-Long Schedule SE Part I Self-Employment Tax Note: If your only income subject to self-employment tax is church employee income, see instructions. Also see instructions for the definition of church employee income. A If you are a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361, but you had $400 or more of other net earnings from self-employment, check here and continue with Part I.... la Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A. Note: Skip lines ia and 1b if you use the farm optional method (see instructions)... If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code AH.... 1b Net profit or loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). Ministers and members of religious orders, see instructions for types of income to report on this line. See instructions for other income to report. Note: Skip this line if you use the nonfarm optional method (see instructions)... 3 Combine lines 1a, 1b, and 2.... 4a If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3.. Note: If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here Combine lines 4a and 4b. If less than $400, stop; you don't owe self-employment tax. Exception: If less than $400 and you had church employee income, enter-O- and continue 5a Enter your church employee income from Form W-2. See instructions for definition of church employee income.. b Multiply line 5a by 92.35% (0.9235). If less than $100, enter-O- 5b Add lines 4c and Sb... Maximum amount of combined wages and self-employment earnings subject to social security tax or the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2019... 132,900 8a Total social security wages and tips (total of boxes 3 and 7 on Form(s) W- 2) and railroad retirement (tier 1) compensation. If $132,900 or more, skip lines 8b through 10, and go to line 11 3 4a 4b 4c 5a 6 6 7 7 8 Ba 8b 8c d 8d 9 9 10 11 12 13 2) and railroad retirement (tier 1) compensation. If $132,900 or more, skip lines 8b through 10, and go to line 11 b Unreported tips subject to social security tax (from Form 4137, line 10) c Wages subject to social security tax (from Form 8919, line 10). .... Add lines 8a, 8b, and 8c.... Subtract line 8d from line 7. If zero or less, enter -- here and on line 10 and go to line 11. 10 Multiply the smaller of line 6 or line 9 by 12.4% (0.124).. 11 Multiply line 6 by 2.9% (0.029).... 12 Self-employment tax. Add lines 10 and 11. Enter here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55 13 Deduction for one-half of self-employment tax. Multiply line 12 by 50% (0.50). Enter the result here and on Schedule 1 (Form 1040 or 1040-SR), line 14, or Form 1040-NR, line 27 Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income wasn't more than $8,160, or (b) your net farm profits were less than $5,891... 14 Maximum income for optional methods .... 5,440 15 Enter the smaller of: two-thirds (2/3) of gross farm income? (not less than zero) or $5,440. Also include this amount on line 4b above ... Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits were less than $5,891 and also less than 72.189% of your gross nonfarm income, and (b) you had net earnings from self- employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times..... 16 Subtract line 15 from line 14. 17 Enter the smaller of: two-thirds (2/3) of gross nonfarm income (not less than zero) or the amount on line 16. Also include this amount on line 4b above.... From Sch. F, line 9, and Sch. K-1 (Form 1065), box 14, code B. From Sch. C, line 31; and Sch. K-1 (Form 1065), box 14, code A. From Sch. F, line 34, and Sch. K-1 (Form 1065), box 14, code A From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, code C. -minus the amount you would have entered on line 1b had you not used the optional method. Schedule SE (Form 1040 or 1040-SR) 2019 14 15 16 17 1 2 Form 8959 1 N 3 4 OMB No. 1545-0074 Additional Medicare Tax If any line does not apply to you, leave it blank. See separate instructions. 2019 Department of the Treasury Attach to Form 1040, 1040-SR, 1040-NR, 1040-PR, or 1040-ss. Attachment Internal Revenue Service Go to www.irs.gov/Form8959 for instructions and the latest information. Sequence No. 71 Name(s) shown on return Your social security number Richard and Christine McCarthy 100-10-9090 Part I Additional Medicare Tax on Medicare Wages 1 Medicare wages and tips from Form W-2, box 5. If you have more than one Form W-2, enter the total of the amounts from box 5 .... 230,500 2 Unreported tips from Form 4137, line 6 3 Wages from Form 8919, line 5. 4 Add lines 1 through 3... 230,500 5 Enter the following amount for your filing status: Married filing jointly... $250,000 Married filing separately. $125,000 Single, Head of household, or Qualifying widow(er)... $200,000 250,000 6 Subtract line 5 from line 4. If the result is zero or less, enter -0..... 7 Additional Medicare Tax on Medicare wages. Multiply line 5 by 0.9% (0.009). Enter here and go to Part II 175 X Part II Additional Medicare Tax on Self-Employment Income 8 Self-employment income from Schedule SE (Form 1040 or 1040-SR), Section A, line 4, or Section B, line 6. If you had a loss, enter -- (Form 1040-PR or 1040-55 filers, see instructions.)...... 9 Enter the following amount for your filing status: Married filing jointly.. $250,000 Married filing separately $125,000 Single, Head of household, or Qualifying widow(er)... $200,000 250,000 Enter the amount from line 4... 230,500 5 6 0 7 CO 9 10 10 11 Subtract line 10 from line 9 Tf zern or less enter -n- 11 19.500 11 Subtract line 10 from line 9. If zero or less, enter-O-....... 11 19,500 12 13 14 15 16 17 12 Subtract line 11 from line 8. If the result is zero or less, enter-O-.... 13 Additional Medicare Tax on self-employment income. Multiply line 12 by 0.9% (0.009). Enter here and go to Part III Part III Additional Medicare Tax on Railroad Retirement Tax Act (RRTA) Compensation 14 Railroad retirement (RRTA) compensation and tips from Form(s) W-2, box 14 (see instructions)... 15 Enter the following amount for your filing status: Married filing jointly... $250,000 Married filing separately $125,000 Single, Head of household, or Qualifying widow(er).. $ 200,000 16 Subtract line 15 from line 14. If zero or less, enter-O- 17 Additional Medicare Tax on railroad retirement (RRTA) compensation. Multiply line 16 by 0.9% (0.009). Enter here and go to Part IV.... Part IV Total Additional Medicare Tax 18 Add lines 7, 13, and 17. Also include this amount on Schedule 2 (Form 1040 or 1040-SR), line 8 (check box a) (Form 1040-NR, 1040-PR, or 1040-ss filers, see instructions), and go to Part V Part V Withholding Reconciliation 19 Medicare tax withheld from Form W-2, box 6. If you have more than one Form W-2, enter the total of the amounts from box 6... 20 Enter the amount from line 1... 21 Multiply line 20 by 1.45% (0.0145). This is your regular Medicare tax withholding on Medicare wages 22 Subtract line 21 from line 19. This is your Additional Medicare Tax withholding on Medicare wages... 23 Additional Medicare Tax withholding on railroad retirement (RRTA) compensation from Form W-2, box 14 (see instructions) .... 24 Total Additional Medicare Tax withholding. Add lines 22 and 23. Also include this amount with federal income tax withholding on Form 1040 or 1040-SR, line 17 (Form 1040-NR, 1040-PR, or 1040-SS filers, see instructions)....... For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 59475X 18 19 20 III 21 22 23 24 Form 8959 (2019) UMID NO. 1543ZZZT Form 8960 1 3 Net Investment Income Tax- Individuals, Estates, and Trusts 2019 Department of the Treasury Attach to your tax return. Attachment Internal Revenue Service (99) ( Go to www.irs.gov/Form8960 for instructions and the latest information. Sequence No. 72 Name(s) shown on Form 1040 or Form 1041 Your social security number or EIN Richard and Christine McCarthy 100-10-9090 Part I Investment Income Section 6013(9) election (see instructions) Section 6013(h) election (see instructions) Regulations section 1.1411-10(g) election (see instructions) 1 Taxable interest (Form 1040, line 2b; or Form 1041, line 1). 230,500 X 2 Ordinary dividends (see instructions)... 2 3 Annuities from nonqualified plans (see instructions)... 4a Rental real estate, royalties, partnerships, S corporations, trusts, etc. (see instructions). 4a b Adjustment for net income or loss derived in the ordinary course of a non-section 1411 trade or business (see instructions).. 4b c Combine lines 4a and 4b... 4c Net gain or loss from disposition of property (see instructions)... 5a b Net gain or loss from disposition of property that is not subject to net investment income tax (see instructions) 5b c Adjustment from disposition of partnership interest or s corporation stock (see instructions)... 50 d d Combine lines 5a through 5c.. 5d 6 Adjustments to investment income for certain CFCs and PFICs (see instructions) 6 7 Other modifications to investment income (see instructions)... 8 Total investment income. Combine lines 1, 2, 3, 4, 5d, 6, and 7.......... 1, , 7 Part II Investment Expenses Allocable to Investment Income and Modifications 9a Investment interest expenses (see instructions) 9a b State, local, and foreign income tax (see instructions) 9b 761 5a 7 8 C Miscellaneous investment expenses (see instructions) 9c 9c 9d 19,097 X 10 12 13 14 14 15 15 16 Miscellaneous investment expenses (see instructions) d Add lines 9a, 9b, and 9c.... 10 Additional modifications (see instructions). 11 Total deductions and modifications. Add lines 9d and 10 11 Part III Tax Computation 12 Net investment income. Subtract Part II, line 11, from Part I, line 8. Individuals, complete lines 13-17. Estates and trusts, complete lines 18a-21. If zero or less, enter-O- Individuals: 13 Modified adjusted gross income (see instructions). Threshold based on filing status (see instructions) Subtract line 14 from line 13. If zero or less, enter-o- 16 Enter the smaller of line 12 or line 15 17 Net investment income tax for individuals. Multiply line 16 by 3.8% (0.038). Enter here and include on your tax return (see instructions). Estates and Trusts: 18a Net investment income (line 12 above). . b Deductions for distributions of net investment income and deductions under section 542(c) (see instructions)... 18b c Undistributed net investment income. Subtract line 18b from 18a (see instructions) .. 18c 19a Adjusted gross income (see instructions). 19a b Highest tax bracket for estates and trusts for the year (see instructions) 19b Subtract line 19b from line 19a. If zero or less, enter - - 20 Enter the smaller of line 18c or line 19c.. 21 Net investment income tax for estates and trusts. Multiply line 20 by 3.8% (0.038). Enter here and include on your tax return (see instructions) For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 59474M 17 18a 190 20 21 Form 8960 (2019)
