Using the information below, complete a $2020$ tax return for Raphael and Michelle Yustis.

The taxpayers have not received a notice from the IRS or any state or local taxing authority within the last year, outside of notices regarding the Economic Impact Payments.

The taxpayers did not provide a driver's license or state identification.

Introduction

You remember from last year that Raphael was in the military in $2019,$ so you ask if he was still in the military for $2020.$

Taxpayer Information

Taxpayer name:

Raphael R$.$ Yustis

Taxpayer SSN:

$562-00-7540$

Taxpayer DOB:

May $30,1972$

Occupation:

Military IT specialist

Spouse name:

Michelle P$.$ Yustis

Spouse SSN:

$562-00-1081$

Spouse DOB:

July $15,1973$

Occupation:

Pastoral minister

Address:

$1110$ Wormwood Avenue

Your City, YS XXXXX

Preferred phone:

$($XXX$)555-1014$; Type: Cell; OK to call; FCC: Yes; Best Time: Morning

Spouse phone:

$($XXX$)555-2014$; Type: Cell; OK to call; FCC: Yes; Best Time: Afternoon

Taxpayer email:

rryustis@net.net

Spouse email:

mpyustis@net.net

Health Insurance

Did everyone in the household have health insurance in $2020?$

Yes

Total months covered through a state exchange or federal marketplace:

$0$

Total months covered through another plan:

$12$

Was a Form $1095-$A issued?

No

The taxpayers did not provide a Form $1095-$B or Form $1095-$C$,$ but stated they had qualifying health care coverage through their employer all year.

Raphael and Michelle are married and wish to file a joint return. Their SSNs are valid for work in the U$.$S$.$ and were received before the original filing due date of the return $($including extensions$).$ Both are U$.$S$.$ citizens. No one may claim either of them as a dependent. Neither are students. The taxpayers do not wish to designate $$3$ to the Presidential Election Campaign Fund. Raphael is not blind or disabled. Michelle is considered blind, but she is able to participate in substantial gainful activity.

You've undoubtedly heard this phrase before, but you may not know why it matters here. The designations blind and disabled have specific definitions for Social Security Administration $($SSA$)$ and IRS purposes. Click each hyperlink if you'd like to know more.

The Yustises did not suffer any casualty losses during the current tax year. They did not receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency. They do not have a financial interest in or signature authority over a foreign account and did not receive a distribution from, nor were they the grantors of or transferor to$,$ a foreign trust. The IRS has not issued any Identity Protection ID Numbers for their return.

Neither Raphael nor Michelle received any unemployment income. They made $$480$ in cash charitable contributions.

CARES Act Information

The taxpayers did not receive qualified sick and$/$or family leave credits. They do not qualify for the Health Coverage Tax Credit. They did receive a recovery rebate$/$Economic Impact Payment of $$2,400.$

Consolidated Appropriations Act $(2021)$ Information

They also received the second recovery rebate$/$Economic Impact Payment in the amount of $$1,200.$

Household Information

The Yustises rented their home until February $1,2020.$ They purchased a home when Raphael was relocated to a new permanent military position. More information on this is provided later in this case study.

Additional Information

Michelle was injured in a car accident in $2016,$ which resulted in significant loss to her eyesight and mobility. She has been legally blind since $2017.$ She received a personal injury settlement in $2018,$ which helped to pay for necessary medical attention through the years. Finding great strength in her faith during this difficult recovery, Michelle decided to pursue pastoral ministry to help women in similar situations. After the Yustises moved, Michelle reduced her work to only making trips for lectures once or twice a month.

On February $1,2020,$ Raphael and Michelle moved from Former City to Your City, when Raphael was assigned to a new permanent duty station by the military. Former City and Your City are both in Your State. Raphael and Michelle paid $$3,662$ to have their household furnishings and personal possessions moved from Former City to Your City. Raphael was reimbursed $$1,500$ of the moving expenses by the military. The Yustises drove both of the cars they own $102$ miles for the move. The distance from their old home to the new workplace is $112$ miles. The distance from their old home in Former City is six miles from Raphael's old workplace. Raphael began work at the new location on February $3,2020.$

The closing on the new home at $1110$ Wormwood Avenue took place on February $3,2020.$ The closing documents show that the Yustises reimbursed the seller

$3,200.$

Remember

Michelle would like to start contributing as much as she is allowed to a traditional IRA to qualify for the deduction. If there is a remaining amount not deductible for the traditional IRA, then she would like to contribute this amount up to the maximum to a Roth IRA. She is covered under her husband's retirement plan from the military. All contributions will be made before the filing deadline.

Clergy Income & Expenses

All of Michelle's income is represented in the documents she brought in$.$ There was no carryforward of prior$-$year negative qualified business income. Michelle's income was impacted more significantly by their move than by COVID$-19$ mandates and lockdowns. She did not miss work due to concerns of major illness.

She had the following expenses$>>$:

Supplies related to self$-$employment income

$$230$

Mileage related to Form W$-2$ income

$237$ miles

Travel expenses related to self$-$employment income:

Mileage

Meals

Lodging

$2,047$ miles

$745$

What about housing?

Yes, we spent quite a bit of time discussing parsonage or rental allowance. Chapter $5$ gave you an opportunity to express those tax concepts. However, even though the spouse in our scenario did not receive nor require that benefit, there is still an important entry to make in BlockWorks. BlockWorks will be looking for a number on the Clergy Information page. In order to close the loop and let the system know you didn't forget to make an entry, input a negative of $(-1)$ in the Housing allowance received box.

Clergy Information

$($Not for Church Employee Income$)$

Click this link to go to the Schedule SE

Schedule SE

Housing Method #$1-$

Other Income

Raphael and Michelle received a state refund of $$27$ during $2020$ for taxes paid in $2019.$ They did not itemize their deductions in $2019$ because they were renting a home and did not have enough deductions to exceed the standard deduction.

Toward the end of $2019,$ Raphael decided to become a $5\%$ partner of a company his friend owns. Raphael was hesitant, but he did want to diversify his efforts. All Raphael knows is that his friend operates an oil company. He waited to receive his $2020$ Schedule K$-1$ to judge the company's performance, which he was not happy with, and will probably liquidate his remaining portion in $2021.$

Itemized Deductions

Raphael and Michelle are interested in knowing if they can itemize for $2020,$ with the purchase of the new home as well as their medical expenses.

In addition to their mortgage interest incurred in their acquisition mortgage on the new home, real estate taxes paid at closing and on Form$-1098,$ as well as other deductible expenses related to the home acquisition, they also paid the following expenses in $2020$:

Church contributions by cash$/$check

$$480$

Personal property tax, assessed on vehicle value

$$642$

Doctor bills for Michelle

$$1,023$

Guide dog "Sparky"

$$5,000$

Veterinarian bills for Sparky

$$968$

Food and grooming fees for Sparky

$$471$

Tax preparation fee

$$250$

The Yustises decided to purchase a guide dog in $2020$ for Michelle to help her get around more independently. The dog's name is Sparky. The cost for purchasing the guide dog was $$5,000.$ The Yustises have receipts for all expenses they are claiming as itemized deductions. If they itemize their deductions, Raphael and Michelle would prefer to claim the deduction for state income tax rather than state sales tax.

$2019$ Earned Income

The taxpayer$($s$)$ had earned income of $$73,975$ in $2019.$

Information Documents

Raphael and Michelle brought in two Forms W$-2,$ one Form SSA$-1099,$ one Form $1098,$ one Form $1099-$G$,$ one Form $1099-$NEC, one Form $1099-$INT$*,$ one Form $1099-$DIV, and one Form K$-1(1065).$ They had no other income.

a Employees social security number

$562-00-1081$

b Employer identification number $($EIN$)$

$09-5620801$

c Employers name, address,$2020$

Department of the Treasury$-$Intemal Revenue Service

Form W$-2$ Wage and Tax Statement

Copy B$-$To Be Filed With Employees FEFORM SSA$-1099-$ SOCIAL SECURITY BENEFIT STATEMENT

$2020$ PART OF YOUR SOCIAL SECURITY BENEFITS SHOWN IN BOX $5$ MAY BE TAXABLE INCORRECTED $($if checked$)$

PAYERS name, street address, city or town, state or province, country, ZP Payers RTN $($optional$)$ OMB N

OMB No $1545-0110$

$2020$

CORRECTED $($if checked$)$

PAYERS name, street address, city or town, state or province, country, ZIP la TCertain

Government

Payments

$ $27\mathrm{.}00$

CORRECTED $($if checked$)$

PAYERS name, street address, city or town, state or provinco, couLimits based on the loan amount

Mortgage

Interest

Statement

CORRECTED $($if checked$)$

RECIPIENTS$/$LENDERS name, street address,Nonemployee

Compensation

CORRECTED $($if checked$)$

PAYERS name, street address, city or town, state or province, country, ZIP

O$15$

Credits

$5$

$$

D

$651119$

Final K$-1$ Amended K$-1$

OMB No $1545-0123$

Schedule K$-1$

$2020$ Part III Partners Share of Current Year Inc$12$ Section $179$ deduction

$13$ Other deductions

$*$ Partners share of abilities:

Beginning

Ending

Nonrecourse

Qualified nonrecour