Tax return Problem #1

Daniel B. Butler and Freida C. Butler, husband and wife, file a joint return. The Butlers live at 625 Oak Street in Corbin, KY 40701. Dan's Social Security number is 111-11-1112, and Freida's is 123-45-6780. Dan is 66 years old and Freida is 57 years old.

During 2020, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom live in their home:

1. Gina, Freidas daughter, age 22, a full-time student, who has no income of her own. Gina's Social Security number is 123-45-6788.
2. Willie, Freidas son, age 15. Willie's Social Security number is 123-45-6787.
3. Ben, Daniels son age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786.
4. Dan is retired and Freida was employed as a salesperson for Corbin Realty, Inc. Selected information from Freidas W2 form and Danielss 1099-SSA is presented below.

	Description	Dan	Freida
W-2	Wages, tips, other compensation		$86,000
W-2	Federal income tax withheld		$6,400
1099-SSA	Social security benefits	$18,000

Other income (as reported on 1099 Forms) for 2020 consisted of the following:

Interest on savings at Second Bank		200
Interest on City of Corbin bonds		900
Interest on First Bank CD		182

Dan was divorced from his first wife Alexa Smith, SS# 111-22-3333 on May 1, 2000. He paid Alexa $12,000 of alimony payments in 2020.

Freida was divorced from her husband Steve on March 15, 2008. She received $6,000 from Steve in child support for Willie in 2020.

Dan participated on a game show in 2020 and won a cash prize of $7,000.

Dan and Freida's total itemized deductions were $13,600.

Required:

Compute Dan and Freidas 2020 Federal income tax payable (or refund due). Use Form 1040 and Schedule 1 to complete this tax return. If there is a tax overpayment, the Butlers would like a refund. If additional tax is due, assume no underpayment penalty applies.

It may be necessary to complete schedule 1 before completing Form 1040.

• Enter all amounts as positive numbers.
• Round your entries on the forms to the nearest dollar.
• Make realistic assumptions about any missing data.