Tax Return #2 Lawrence Logan

Use the following information to complete Lawrence Logans 2022 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.

You will need the following forms and schedules in addition to form 1040 to complete the assignment: Schedule 1 (other income and deductions), Schedule 2 (other taxes such as SE Tax), Schedule C (for business income and deductions), Schedule SE (net self-employment income), Schedule 8812 and form 8995 (qualified business income deduction). You need to determine if Schedule A is needed (are the total itemized deductions higher than the standard deduction for this filing status taxpayer?). The forms, schedules, and instructions are available in the Blackboard course under instructor resources or ate the IRS Website (www.irs.gov). The instructions for the forms are very helpful and can be downloaded from the IRS website. Also, use Form Finder in the TR Checkpoint library for additional line-by-line instructions.

Lawrence Logan was married, however, his wife Lettie passed away in 2019. They have two children (twins), Laura and Liam. Lawrence worked as the General Manager at Lucky Luigis in Las Cruces, NM earning a salary of $102,800. He also did some accounting/bookkeeping work on the side for the company Bookkeeping Easy, LLC. Lawrence won $5,760 in gambling pools at work for college basketball. Lastly, he received $15,000 from his wifes life insurance policy which will be paid out in 2022.

• DO NOT prepare any state income tax return
• The Logans life at 4452 Ocotillo Drive, Santa Teresa, NM 88008
• Lawrences birthday is 9/17/1982 and his Social Security number is 557-61-2436
• Lauras birthday is 10/21/2009 and his Social Security number is 552-98-3981
• Liams birthday is 10/21/2009 and her Social Security number is 552-97-1187
• The Logans do not have any foreign bank accounts or trust, nor did they have any transactions with virtual currency
• Lawrence did file forms 1099 (contract labor) for his bookkeeping services as required and he uses the cash method of accounting for his business
• The Logans want you to determine the best filing status for their family
• The Logans had health insurance coverage all year provided by Lucky Luigis
• A $2,000 credit is available for dependents claimed on the tax return under 17 years old (line 19, Form 1040). You need to use Schedule 8812
• Do not consider AMT tax for the tax return
• Determine qualified business income deduction available for Lawrences bookkeeping business (Form 8995 line 5) and line 13 Form 1040 is the same number.

The Logans reported the following activities and payments during the year

2022 Activity

Lawrences W2 Infomration:

See Attached W-2 Form

Business Activity

Lawrences Bookkeeping Income

See Attached 1099 from Bookkeeping Easy, LLC

Lawrences Bookkeeping Expenses

Business office expense $2133

Contract labor expense $4250

Business insurance expense $2775

Advertising expense 2440

Business mileage (331 miles 1/1 6/30) TBD ***see note below

(503 miles 7/1 12/31

Casualty loss on house from hailstorm $2656

Gambling losses for the year $6400

Real state taxes paid on residence $2920

Real estate taxes paid $4821

(original loan $350,000 in 2012, outstanding balance of $295,000)

Home equity loan interest paid $3185

Lawrence used the home equity loan to pay for his trip to Las Vegas to gamble. Interest was paid to LFCU (outstanding balance of $55,000)

Cash contributions to St Johns church (Lawrence has receipts) $1995

Medical expenses 4110

*** Notes for Lawrences use of vehicle for business

Lawrences vehicle (Honda Passport) is used for personal and business. He started using his vehicle for his business on 1/1/2022. He tracked his mileage and documented it. He wants to take the mileage expense in his business and NOT actual vehicle expenses.

Total mileage for 2022: 1,702

Personal miles: 868

Business miles: 331 from 1/1/22 6/30/2022

Business miles: 503 from 7/1/2022 12/31/2022

Commuting miles: 0

Form W2 wage and tax statement

Employers name: Lucky Luigis

1. Wage $102,800
2. Federal Income tax withheld $9750
3. Social Security wages $102,800
4. Social Security tax withheld $6374
5. Medicare wages and tips $102,800
6. Medicare tax withheld $1491

Form 1099-NEC, Non-employee compensation

Payers: Bookkeeping Easy, LLC $17,900

Recipients name: Lawrence Logan