Using the tax software, complete the tax return, including Form 1040 and all appropri- ate forms, schedules, or worksheets Answer the questions following the scenario

Note: When entering Social Security numbers (SSNs) or Employer Identi cation Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.

Basic Scenario 8: Valerie Sinclair Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario. Note: When entering Social Security numbers (SSNs) or Employer Identification Numbers (EINs), replace the Xs as directed, or with any four digits of your choice. Interview Notes Valerie's husband, Donald, died in March 2015. She has not remarried. They have two sons, Ethan and Patrick, who lived with her all year. Valerie paid more than half of Patrick's support and all of the cost of keeping up the home. Her son, Ethan, is permanently and totally disabled. He received disability income that provided more than half of his own support. Valerie lost her job on October 20, 2016 and received unemployment income. She cashed in her 401(k) savings and used the money for household expenses. She does not qualify for any exception to the additional tax on early distributions. Her son, Patrick, attended after-school care while Valerie worked. Valerie and Patrick had health insurance through Valerie's employer until the end of October. They did not enroll in any other coverage until January 2017. Ethan had MEC all year through Medicaid. 40 Basic Scenarios Basic Scenarios 41 42 Basic Scenarios Basic Scenarios 43 44 Basic Scenarios Basic Scenarios 45 46 Basic Scenarios Basic Scenarios 47 Basic Scenario 8: Test Questions 20. Which allowable filing status is most advantageous to Valerie? a.\tSingle b. Head of Household c. Qualifying Widow(er) d. Married Filing Jointly 21. Ethan is Valerie's qualifying child for which of the following benefits? a. Exemption for a dependent b. Child tax credit c. Earned income credit d. None of the above 22. What is the total federal income tax withholding for Valerie's tax return? $________. 23. What is Valerie's credit for child and dependent care expenses shown in the tax and credits section of her tax return? a.\t$336 b.\t$352 c.\t$368 d.\t$384 24. Valerie and Patrick did not have Minimum Essential Coverage (MEC) for two months of the tax year. How does this affect her tax return? a. She must complete Form 8965 to claim the short coverage gap exemption. b. She must make a Shared Responsibility Payment for herself. c. She must make a Shared Responsibility Payment for herself and Patrick. d. None of the above. 25. What is the amount of additional tax on the distribution from Valerie's 401(k), shown in the Other Taxes section of Form 1040? a.\t$0 b.\t$130 c.\t$260 d.\t$520 48 Basic Scenarios