Scenario

I am a tax preparer and have been asked to complete the previous year's tax return for new clients Gabriel and Sophie Dubois. Because the Dubois children, Jean and Juliette, are now in college or soon to enter, Gabriel and Sophie decided to pursue opportunities that resulted in additional income streams. Gabriel is an appraiser, and Sophie is an ophthalmologist at the local clinic. The Dubois couple provided the tax documents and additional information you requested for their tax return during their interview. In this interview, Sophie mentioned that she hates owing money on her tax return and wants to know how to avoid that scenario. To properly prepare the complex income tax return and advise your client, you must apply the appropriate tax laws, regulations, and codes.

Directions

Complete an individual federal tax return for the current year and construct a memo to share results and recommendations with the client.

Part One: Tax Code and Planning: Use the client's tax profile and provided documents to identify the appropriate tax forms needed to complete the tax return. The completed tax form will assess these criteria.

1. Connect the client's information to the appropriate tax forms to complete the tax return.
2. Apply the relevant information from the provided taxpayer source documentation to the tax forms.
3. Assess the character of all income sources.
4. Evaluate whether the taxpayer's deductions should be itemized or not based on ethical standards for determining and communicating deductions.
5. Distinguish between the expenses connected with the client's employment eligible for deduction and those not.

Part Two: Prepare a Complex Tax Return: Complete a tax return that adheres to tax laws, regulations, and codes.

1. Evaluate which items meet the criteria for being included in gross income.
2. Categorize deductions from adjusted gross income or for adjusted gross income, including any variances or inaccuracies in these deductions.
3. Calculate the individual taxable income using the tax formula.
4. Determine whether the client has overpaid or underpaid their taxes. Include the following in your response:
   1. The client's calculated tax liability
   2. The client's subtracted tax withholdings for the current tax year
5. Explain the tax laws, regulations, and codes used to determine the proper tax reporting.

Part Three: Tax Position Advising: Summarize the tax return results in a memo and advise the client explaining how they can avoid having a balance due for future tax returns.

1. Summarize the tax issue and possible solutions using concise language and ethical standards for tax preparers.
2. Determine the client's potential positions for future tax returns using tax law to support your reasoning.
3. Recommend the best and most practical solution for the client based on their goal for future tax returns using concise language.
4. Justify whether the client is eligible for VITA or TCE.
5. Justify your recommendation to the client using applicable tax laws, regulations, and codes.

What are the tax forms to use that apply to the client's situation? Also, writing a Client Memos.