Tax Forms Problem

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6784 and 111-11-1113, respectively. Alices birthday is September 21, 1973, and Bruces is June 27, 1972. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (Employer Identification Number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (Employer Identification Number 11-1111111).

The following information is shown on their Wage and Tax Statements (Form W2) for 2020.

Line	Description	Alice	Bruce
1	Wages, tips, other compensation	$64,300	$62,000
2	Federal income tax withheld	5,800	4,300
3	Social Security wages	64,300	62,000
4	Social Security tax withheld	3,596	3,850
5	Medicare wages and tips	64,300	62,000
6	Medicare tax withheld	841	900
15	State	Massachusetts	Massachusetts
16	State wages, tips, etc.	64,300	62,000
17	State income tax withheld	2,800	3,400

The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1996, Social Security number 123-45-6788) and Kyle (born May 3, 2004, Social Security number 123-45-6780). Both children are full-time students and live with the Byrds except when they are away at college. Cynthia earned $6,200 from a summer internship in 2020, and Kyle earned $3,800 from a part-time job. Both children received scholarships covering tuition and materials.

During 2020, the Byrds provided 60% of the total support of Bruces widower father, Sam Byrd (born March 6, 1944, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sams life, received life insurance proceeds of $1,800 on December 28.

The Byrds had the following expenses relating to their personal residence during 2020:

Property taxes	$6,000
Qualified interest on home mortgage (acquisition indebtedness)	8,450
Repairs to roof	5,975
Utilities	4,025
Fire and theft insurance	2,200

The Byrds had the following medical expenses for 2020:

Medical insurance premiums	$4,950
Doctor bill for Sam incurred in 2019 and not paid until 2020	6,800
Operation for Sam	9,200
Prescription medicines for Sam	800
Hospital expenses for Sam	4,200
Reimbursement from insurance company, received in 2020	4,250

The medical expenses for Sam represent most of the 60% that Bruce contributed toward his fathers support.

Other relevant information follows:

• When they filed their 2019 state return in 2020, the Byrds paid additional state income tax of $1,200.
• During 2020, Alice and Bruce attended a dinner dance sponsored by the Lowell Police Disability Association (a qualified charitable organization). The Byrds paid $250 for the tickets. The cost of comparable entertainment would normally be $50.
• The Byrds contributed $5,200 to Lowell Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of $450) to the Salvation Army. All donations are supported by receipts, and the clothing is in very good condition.
• Via a crowdfunding site (gofundme.com), Alice and Bruce made a gift to a needy family who lost their home in a fire ($400). In addition, they made several cash gifts to homeless individuals downtown (estimated to be $115).
• In 2020, the Byrds received interest income of $2,950, which was reported on a Form 1099INT from Second National Bank, 125 Oak Street, Lowell, MA 01850 (Employer Identification Number 98-7654322).
• The home mortgage interest was reported on Form 1098 by Lowell Commercial Bank, P.O. Box 1000, Lowell, MA 01850 (Employer Identification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2020) was taken out by the Byrds on May 1, 2016.
• Alices employer requires that all employees wear uniforms to work. During 2020, Alice spent $900 on new uniforms and $756 on laundry charges.
• Bruce paid $425 for an annual subscription to the Journal of Franchise Management and $825 for annual membership dues to his professional association.
• Neither Alices nor Bruces employer reimburses for employee expenses.
• The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.
• This year the Byrds gave each of their children $8,000, which was then deposited into their Roth IRAs.
• Alice and Bruce paid no estimated Federal income tax, and they did not engage in any virtual currency transactions during the year. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campaign Fund. The Byrds received the appropriate recovery rebates (economic impact payments)

Use the following forms to complete a 2020 tax return:

Form 1040 Instructions

Form 1040 Schedule A

Form 1040 Schedule B

Form 1040 Tax Tables

Form 1040