Scenario 1: Jacob Weaver is a contractor operating as a sole proprietorship (EIN 12-3456789). 2019 Gross income: $278,322.25.

• Business expenses:
  • Fuel for equipment $64,080.00
  • Repairs and maintenance $17,342.00
  • Lubricants for Equipment $9,670.00
  • Insurance $6,500.00
  • Wages $6,300.00
  • Vehicles $1,768.00
  • Legal and Professional Expenses $1,750.00
  • Taxes and Licenses $1,412.00
  • Advertising $300.00
• Clients owe him a total of $53,000, for work completed in 2019.
• 2019 estimated tax payments were $25,000.
• He is using a bedroom in his house as a home office. (Square footage of home 5,600 Office 240 sq. ft.)
• He has one half-time employee, Martin, who had been unemployed since returning from Afghanistan and is disabled.
• Martin worked for Jacob for 20 hours a week, for 41 weeks of 2019. He earned $10,500.
• Jacob had to spend $7,350 for disabled access equipment for Martin.

Instructions

Complete the following:

• Read the information provided in the scenario above.
• Download the appropriate forms and publications from IRS.gov to complete this assessment.
• Complete the entries on tax forms required for a sole proprietorship return.
• Analyze official rules and instructions to correctly compute SE tax and SE deduction.
  • 1040sc.
  • 1040sse.
• Determine whether Jacob's business is eligible for any tax credits. Is Jacob's business eligible to use the Work Opportunity Credit and Disabled Access Credit?
• Determine eligible business deductions.
• Interpret official rules and instructions to record correct entries on tax forms.
• Submit the tax forms.

Scenario 2 (answers from scenario 1 are needed to answer scenario 2):

Jacob and Taylor Weaver, ages 45 and 42 respectively, are married and are filing jointly in 2019.

• They have three children, Ashley, age 9; Patrick, age 6; and John, age 17.
  • Social Security numbers are: Jacob, 222-33-4444; Taylor, 555-66-7777; Ashley, 888-99-1234; Patrick, 789-56-4321; John, 123-45-6789.
• Taylor works part-time as a paralegal.
  • She earned $31,000 in 2019.
• Income Taxes: $4,200 withheld.
• Interest received from Local Bank: $6,575.
• Estimated tax payments: $25,000.
  • $350 paid with their 2018 state tax return.
• Jacob and Taylor bought their first house in 2019.
  • Home mortgage interest: $12,246.
  • Property tax: $12,230.
• Federal income withholding: $2,350.
• Charities: $4,500.
• $435 to rent a moving truck.
• $8,000 to put new siding on the house.
• $11,600 for child care expenses ($5,800 for each child).
  • It was paid to Lil Tigers Daycare, 1115 S. Garrison St., Muncie, IN 47305 (EIN 98-7654321).
• Taylor is a part-time student at Ball State University in Muncie.
  • She received a 1098-T indicating tuition and fees for 2019 in the amount of $6,011.
• Health insurance for the family, through Taylor's job, cost $7,500 for all 12 months of 2019.
  • They paid deductibles and co-payments of $2,550.

Instructions

Complete the following:

• Read the information in the scenario below.
• Download the appropriate forms and publications from IRS.gov.
• Enter information from Assessment 2, Schedules C and SE, into the 1040 form.
• Apply the rules for adjustments to adjusted gross income.
  • Enter applicable information from the scenario into the 1040 form.
  • Interpret official rules and instructions to record correct entries on the tax form.
• Calculate the AGI for the Weavers.
• Submit the tax form