The question:

Prepare the Federal income tax return of 2019 for the Smiths. You will include Form 1040, Schedule 1, Schedule C-only page 1, and Schedule A, Schedule SE-only page 1

Checking numbers: Kyles net business income (Sch. C) $125750

AGI-Line 8a is $174066

They owe $221 (line 23) (you may have one or two dollar difference due to the rounding)

Individual Return (Linda and Kyle Smith) Linda and Kyle Smith are married taxpayers who file a joint return. Their social security numbers are 123-45-6789 and 111-11-1111, respectively. Linda's birthday is September 21, 1977, and Kyle's is June 27, 1967. They live at 473 Revere Avenue, Lowell, MA 01850. Linda is the office manager for Lowell Dental Clinic. Kyle is the self-employed physical therapist. The following information is shown on Linda's Wage and Tax Statement (Form W-2) for the tax year Line Description Linda 1. Wage, tips, other compensation $58,000 2. Federal income tax withheld 6,960 4. Social security tax withheld 3,596 6. Medicare tax withheld 841 17. State income tax withheld 2,610 During the year, Kyle recorded the following items of his business: Revenue from patient visits $270,000 Property tax on the office 4,500 Mortgage interest on the office 12,000 Depreciation on the office 5,500 Malpractice insurance 37,500 Utilities paid for the office 13,750 Office staff salaries 51,000 Rent payments on equipment 15,000 health insurance premium paid for himself and his dependents 2,500 health insurance premium paid for his employees 5,000 Kyle made the estimate Federal income tax payment totaled $28,000. He also made the estimate state income tax payment of $3,500 during the tax year. The Smiths provide over half of the support of their two children, Abby (born January 25, 1994, Social security number 123-45-6788) and Michael (born February 7, 2000, Social Security number 123-45-6786). Both children are full-time students and live with the Smiths except when they are away at college. Abby earned $4,500 from a summer internship, and Michael earned $3,800 from a part-time job. The Smiths furnished 60% of the total support of Kyle's widower father, Paul Smith (born March 6, 1939, social security number 123-45-6777). Paul died in November 2018, and Kyle, the beneficiary of a policy on Paul's life, received life insurance proceeds of $800, 000 on January 28, 2019. The Smiths also made some investment activities. The following information is shown their investment income / (loss): Interest income from saving account $200 A gain from selling Netflix stock (hold for 7 months) 5,000 A loss from selling Bank of America stock (hold for 15 (1,500) months) An non-business bad debt (hint: tax treatment as short-term (2,000) capital loss) Individual Return (Linda and Kyle Smith) Linda and Kyle Smith are married taxpayers who file a joint return. Their social security numbers are 123-45-6789 and 111-11-1111, respectively. Linda's birthday is September 21, 1977, and Kyle's is June 27, 1967. They live at 473 Revere Avenue, Lowell, MA 01850. Linda is the office manager for Lowell Dental Clinic. Kyle is the self-employed physical therapist. The following information is shown on Linda's Wage and Tax Statement (Form W-2) for the tax year Line Description Linda 1. Wage, tips, other compensation $58,000 2. Federal income tax withheld 6,960 4. Social security tax withheld 3,596 6. Medicare tax withheld 841 17. State income tax withheld 2,610 During the year, Kyle recorded the following items of his business: Revenue from patient visits $270,000 Property tax on the office 4,500 Mortgage interest on the office 12,000 Depreciation on the office 5,500 Malpractice insurance 37,500 Utilities paid for the office 13,750 Office staff salaries 51,000 Rent payments on equipment 15,000 health insurance premium paid for himself and his dependents 2,500 health insurance premium paid for his employees 5,000 Kyle made the estimate Federal income tax payment totaled $28,000. He also made the estimate state income tax payment of $3,500 during the tax year. The Smiths provide over half of the support of their two children, Abby (born January 25, 1994, Social security number 123-45-6788) and Michael (born February 7, 2000, Social Security number 123-45-6786). Both children are full-time students and live with the Smiths except when they are away at college. Abby earned $4,500 from a summer internship, and Michael earned $3,800 from a part-time job. The Smiths furnished 60% of the total support of Kyle's widower father, Paul Smith (born March 6, 1939, social security number 123-45-6777). Paul died in November 2018, and Kyle, the beneficiary of a policy on Paul's life, received life insurance proceeds of $800, 000 on January 28, 2019. The Smiths also made some investment activities. The following information is shown their investment income / (loss): Interest income from saving account $200 A gain from selling Netflix stock (hold for 7 months) 5,000 A loss from selling Bank of America stock (hold for 15 (1,500) months) An non-business bad debt (hint: tax treatment as short-term (2,000) capital loss)