Transcribed image text: 1. Assume the date is March 30, 2022 and your clients, Steven A. and Anne B. Sheppard (Social Security numbers 333-22-4443 and 333-22-4442, respectively), who are both age 31 at 12/31/21 (both born 2/1/90) and live at 55 Lake Street, Sioux Falls SD 57101 (phone 605-477-0001) want you to prepare their 2021 Form 1040 as married filed jointly with one dependent (their 1-year old qualifying child named Jack A. Sheppard: Social Security number 333-55-1112, born 4/1/19) 2021 taxable income included Steven's taxable wages of $60,000 (as a truck driver) and Anne's taxable wages of $65,000 (as a programmer), 2021 federal income tax withholding was $6,000 for Steven and $6,500 for Anne. Note South Dakota does not have an income tax They also received taxable interest income of $300 from their savings account at State Bank, municipal bond interest income of $400 from a Sioux falls School District Bond investment, and qualified dividend income of $10,000 from Best Buy Corporation Steven entered a drawing at the grocery store and won a pair of Vikings football tickets valued at $225 each (total value $450). Susan's sister died during 2021, and Susan received $1,000 as beneficiary on her sister's life insurance policy. Susan also inherited $1,500 cash from her sister's checking account. Steven's parents gave him $1,850 cash during 2021. Susan paid $2,900 in student loan interest to the Department of Education during 2021. The couple made charitable contributions of $700 during 2021 to their church. The couple plans to use the standard deduction The couple paid Susan B. Anthony (1 Oak Street, Sioux Falls SD 57101, Social Security Number 444-55-9999, phone 605-477-9999) $5,500 for qualifying daycare at Susan's home for Jack so that Steven and Anne could both work during 2021 They both want $3 to go to the Presidential Election Campaign. They want you to be able to discuss the return the IRS, if necessary, The couple had no foreign financial accounts, no foreign trusts, and virtual currency transactions during 2021 They received the full amount of Economic Impact Payments ($4,200 in April 2021) as reported on Form EIP3, accordingly, the amount to be reported on Form 1040pg2, line 30 is zero. Steven and Anne each received $900 ($1,800 in total) of Advance Child Tax Credit payments during 2021, as reported on Letters 6419 received from the US Treasury Ignore underpayment of estimated tax penalty, if any. If they have an overpayment, they want it refunded via mailed check. Prepare the 2021 federal income tax return for Steven and Anne (Forms 1040, 2441, 8812pg1 and 8867, and Schedules 1 and 3; and Schedule B). You are not required to use software in completing this project. Form 8867 has already been completed by Instructor and is attached for your convenience. Blank copies of the other required form are attached for your convenience. In preparing the return, make reasonable assumptions, if necessary, 2. Steven is covered by a retirement plan through his work, but Anne is not. The couple wants to know how much Anne could contribute for 2021 in 2022 by the due date of the tax return and how much additional refund (if any) they would receive as a result of the contribution a. What is the maximum amount Anne could contribute to a traditional IRA for 2021 by the 2022 due date for the 2021 return? How much 2021 tax savings will the couple receive if Anne contributes the maximum amount to a traditional IRA for 2021 in 2022? b. What is the maximum amount Anne could contribute to a Roth IRA for 2021 by the 2022 due date for the 2021 tax year? How much 2021 tax savings will the couple receive if Anne contributes the maximum amount to a Roth IRA for 2021 in 2022? c. Assuming Anne could contribute to either a traditional or Roth IRA, why might the Roth be more attractive than the traditional? Transcribed image text: 1. Assume the date is March 30, 2022 and your clients, Steven A. and Anne B. Sheppard (Social Security numbers 333-22-4443 and 333-22-4442, respectively), who are both age 31 at 12/31/21 (both born 2/1/90) and live at 55 Lake Street, Sioux Falls SD 57101 (phone 605-477-0001) want you to prepare their 2021 Form 1040 as married filed jointly with one dependent (their 1-year old qualifying child named Jack A. Sheppard: Social Security number 333-55-1112, born 4/1/19) 2021 taxable income included Steven's taxable wages of $60,000 (as a truck driver) and Anne's taxable wages of $65,000 (as a programmer), 2021 federal income tax withholding was $6,000 for Steven and $6,500 for Anne. Note South Dakota does not have an income tax They also received taxable interest income of $300 from their savings account at State Bank, municipal bond interest income of $400 from a Sioux falls School District Bond investment, and qualified dividend income of $10,000 from Best Buy Corporation Steven entered a drawing at the grocery store and won a pair of Vikings football tickets valued at $225 each (total value $450). Susan's sister died during 2021, and Susan received $1,000 as beneficiary on her sister's life insurance policy. Susan also inherited $1,500 cash from her sister's checking account. Steven's parents gave him $1,850 cash during 2021. Susan paid $2,900 in student loan interest to the Department of Education during 2021. The couple made charitable contributions of $700 during 2021 to their church. The couple plans to use the standard deduction The couple paid Susan B. Anthony (1 Oak Street, Sioux Falls SD 57101, Social Security Number 444-55-9999, phone 605-477-9999) $5,500 for qualifying daycare at Susan's home for Jack so that Steven and Anne could both work during 2021 They both want $3 to go to the Presidential Election Campaign. They want you to be able to discuss the return the IRS, if necessary, The couple had no foreign financial accounts, no foreign trusts, and virtual currency transactions during 2021 They received the full amount of Economic Impact Payments ($4,200 in April 2021) as reported on Form EIP3, accordingly, the amount to be reported on Form 1040pg2, line 30 is zero. Steven and Anne each received $900 ($1,800 in total) of Advance Child Tax Credit payments during 2021, as reported on Letters 6419 received from the US Treasury Ignore underpayment of estimated tax penalty, if any. If they have an overpayment, they want it refunded via mailed check. Prepare the 2021 federal income tax return for Steven and Anne (Forms 1040, 2441, 8812pg1 and 8867, and Schedules 1 and 3; and Schedule B). You are not required to use software in completing this project. Form 8867 has already been completed by Instructor and is attached for your convenience. Blank copies of the other required form are attached for your convenience. In preparing the return, make reasonable assumptions, if necessary, 2. Steven is covered by a retirement plan through his work, but Anne is not. The couple wants to know how much Anne could contribute for 2021 in 2022 by the due date of the tax return and how much additional refund (if any) they would receive as a result of the contribution a. What is the maximum amount Anne could contribute to a traditional IRA for 2021 by the 2022 due date for the 2021 return? How much 2021 tax savings will the couple receive if Anne contributes the maximum amount to a traditional IRA for 2021 in 2022? b. What is the maximum amount Anne could contribute to a Roth IRA for 2021 by the 2022 due date for the 2021 tax year? How much 2021 tax savings will the couple receive if Anne contributes the maximum amount to a Roth IRA for 2021 in 2022? c. Assuming Anne could contribute to either a traditional or Roth IRA, why might the Roth be more attractive than the traditional