< Tax Return Problems 56. Daniel B. Butler and his spouse Freida C. Butler 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 was born on January 15, 1969, and Freida was born on August 20, 1970. During 2020, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home: a, Gina, their daughter, age 22, a full-time student, who married on December 21, has no income of her own and did Communications Decision Making Tax Forms Problem ProConnect Tax not file a joint return with her husband, Casey, who earned $10,600 during 2020. Gina's Social Security number is 123-45 6788. b. Willie, their son, age 19, graduated high school in May 2020. He is taking a leap year and will not begin college until 2021. He had gross income of $6,300 in 2020. Willie's Social Security Wind number is 123-45-6787 c. Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786. Dan was employed as a manager by WJJJ, Inc. (employer identification number 11-1111111, 604 Franklin Street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899 Central Street, Corbin, Ky 40701). Selected information from the W-2 forms provided by the employers is presented below. Dan and Freida use the cash method. Line Description Dan Freida 1 Wages, tips, other compensation $74,000 $86,000 2 Federal income tax withheld 11,000 12,400 17 State income tax withheld 2,960 3,440 Freida sold a house on December 30, 2020, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W-2) on the January 10, 2021, closing date. Other income (as reported on 1099 forms) for 2020 consisted of the following: Activate Wind Other income (as reported on 1099 forms) for 2020 consisted of the following: Dividends on CSX stock (qualified) Interest on savings at Second Bank Interest on City of Corbin bonds Interest on First Bank CD $4,200 1,600 900 382 The $382 from First Bank was an original issue discount. Dan and Freida collected $16,000 on the First Bank CD that matured on September 30, 2020. The CD was purchased on October 1, 2018, for $14,995, and the yield to maturity was 3.3%. Dan participated on a game show and won a cash prize of $7,000. In addition to the above information. Dan and Freida's itemized deductions included the following: Paid on 2020 Kentucky-income tax Personal property tax paid Real estate taxes paid Interest on home mortgage (Corbin S&d) $ 700 600 1,800 4,900 Sales tax from the sales tax table is $1,860 Dan and Freida made Federal estimated tax payments of $8,000. They have never owned or used any virtual currency, and they do not wish to contribute to ate Window $8,000. They have never owned or used any virtual currency, and they do not wish to contribute to the Presidential Election Campaign. For 2020, they received the correct amount of economic impact payments (2020 recovery credits). The Kentucky income tax rate is 4%. Compute Dan and Freida's 2020 Federal income tax payable (or refund due), and complete their 2020 tax return using the appropriate forms and schedules. Suggested software: ProConnect Tax. The following information should be helpful in your preparation of the tax return. (1) (a) (b) Requirement: Prepare the federal income tax return on the appropriate IRS forms. (Even if you use a software program, you must turn in manual entries on IRS forms.) Copies of those forms and instructions are available at www.irs.gov. PLEASE MAKE EVERY EFFORT TO SUBMIT (SEE LINK IN Canvas), EITHER A SINGLE PDF OR A SINGLE WORD DOCUMENT OF THE ENTIRE TAX RETURN. Put your name at the top of each page of the tax forms and summary. THANK YOU. Additional Requirements: Prepare a brief top sheet summarizing the factual information in the format of the tax formula. (2) Strategy: You might want to start with page 1 of the 1040 and manually make entries (pencil recommended if entries on paper forms or typing into forms at irs.gov and saving pdf of forms). You may then need to prepare subsidiary forms (e.g., Schedules A & B). You might also want to work out the figures for the tax formula roughly first before beginning the return. (3) Check Figures: Adjusted gross income 173,182 Itemized 14,440 Taxable income 148,382 (4) Grading: (a) This manual return is 50 points (b) Forms required: 1040 pages 1&2, Schedules 1, A, B; worksheet line 16. Please prepare Sch. A. Taxpayer wants larger of itemized or standard. (5) Additional Helpful Information: (6) (a) Please use the sequence numbers in the upper right-hand corner of the official IRS forms for the proper order. (b) Do not calculate next year's estimates or any late filing penalty or interest. Notes: (a) Dividends are both qualified and ordinary. (b) OID is $382 and should be included on Schedule B. (7) Be sure to complete all required forms and top sheet summary according to the directions. These must be legible, if I can't read then, I can't grade them. Penalty for failing to follow the directions: no points earned. Partial credit is available as long as the directions are followed.