Question

Please complete the 2019 Form 1040 (Stop after completing Line 12a),

Schedule-1 and Schedule A for the taxpayer: Julie Anderson is a single parent and lives with her dependent daughter Alice who is 17-years old. Julie is a project manager and her W-2 wage is $75,200. Julie's father passed away on April 14. She inherited cash of $50,000 from her father and his baseball card collection, valued at $2,000. Every year she also receives interest income from a trust fund, which does not invest in municipal bonds or other tax-exempt securities. She took the standard deduction on her 2018 federal tax return. Her 2019 filing status is head of household.

She also has the following items for 2019: Interest income from the trust fund……. $2,000

Ordinary dividend income.....................................................$500 (All the dividends are qualified for the 15% tax rate)

She also bought 50 shares Apple Inc. stock (AAPL) when the price was $100 per share. AAPL's market closing price for December 2019 is $250 per share.

During the year she went to Vegas and won $ 1,300 in a poker game. However, she lost $2,000 at other casinos.

She also provided the following information:

Illinois state income tax refund………….. $ 250

Federal income tax refund……………… $2,400

Child support from her ex-husband…….. $6,000

Alimony payment from her ex-husband. Their divorce was finalized on August 15, 2019…..$12,000

During the year she received $4,000 insurance payout from AFLAC due to a temporary disability. She bought the insurance policy herself.

In addition, she also provided the following information:

State income tax withheld from her paycheck…………………. .$ 3,200

Federal income tax withheld from her paycheck………………. $ 9,000

Social security tax paid as an employee............. $ 5,640

Home mortgage loan interest………………… $ 5,500

Real estate tax on her house………………… $ 4,000

Personal-use car loan interest……………….. $ 2,000

She also paid $2,000 of qualified student loan interest.

Ms. Anderson had a medical procedure and incurred qualified medical costs of $30,000. Her health insurance policy pays 80% of the medical cost and Julie paid the remaining 20% out of her own pocket.

Her car was completely damaged in hurricane Hana, a federally declared natural disaster. Before the disaster the car has a fair market value of $12,000. She bought the car for $25,000 when it was new.

PLEASE ANSWER THIS QUESTION FROM ABOVE INFO

1. Form 1040 Line 1 _____ (W-2 wages, enter without comma or $)

2. Taxable interest on 1040 Line 2b _______

3. 1040 Line 3a _______

4. 1040 Line 3b ________

5. Schedule 1, Line 1 Taxable refunds (enter 0 if none) ______

6. Schedule 1, Line 8 Other income (enter 0 if none) ______

7. Schedule 1, Line 20 (Student loan interest) ______

8. Form 1040, Line 8b (Adjusted Gross Income) ______

9. Schedule A LIne 4 (Medical and Dental) ______

10. Schedule A Line 5a (State income tax paid) ______

11. Schedule A Line 5b (Real estate taxes) ____

12. Schedule A Line 7 _______

13. Schedule A LIne 10 (Interest you paid) ____

14. Schedule A Line 15 (Deductible Casualty Loss

15. Schedule-A Line 16 Other Itemized Deductions ____

16. Schedule-A Total Itemized Deductions _____

17. Form 1040 Line 9 (Standard or Itemized Deduction) _____

18. Taxable income _______

19. Total Tax (Form 1040 Line 12a) _______

Answer 1

Sr No	Particulars	Amount	Explanation
1.	Form 1040 Line 1 (Salaries, wages, tips etc. on Form W-2)	75,200
2.	Taxable interest on 1040 Line 2b	2,000
3.	1040 Line 3a - Qualified Dividend	500
4.	1040 Line 3b - Ordinary Dividend	-
5.	Schedule 1, Line 1 Taxable refunds	-	As Julie has adopted standard deduction during previous year, refund on state income tax will not be taxed as she has not received deduction for the same. Federal income tax refund is not taxable.
6.	Schedule 1, Line 8 Other income	1,300	Amount received as an inheritance is not taxable to receiver. Only income earned from such property is taxable. Gambling income can be set off against gambling losses only.
7.	Schedule 1, Line 20 (Student loan interest)	NIL	As modified AGI is same as AGI, deduction allowed will be Nil.
8.	Form 1040, Line 8b (Adjusted Gross Income)	79,000
9.	Schedule A LIne 4 (Medical and Dental)	75	Deduction available = Unreibursed amount $6,000 less 7.5% of AGI 79,000 = 75
10.	Schedule A Line 5a (State income tax paid)	3,200
11.	Schedule A Line 5b (Real estate taxes)	4,000
12.	Schedule A Line 7	7,200	Head of household will be eligible for 10,000 limit for state and local taxes.
13.	Schedule A LIne 10 (Interest you paid)	5,500	Interest on home loan mortagage will be allowed as deduction. Interest on personal use car loan is not allowed as deduction.
14.	Schedule A Line 15 (Deductible Casualty Loss)	4,200	Casualty loss = reduction in FMV 12,000 less insurance reimbursement less 10% of AGI less $100 per casualty.
15.	Schedule-A Line 16 Other Itemized Deductions	1,300	Gambling losses are allowed to the extent of gambling income only. Any excess loss is carried forward to future years.
16.	Schedule-A Total Itemized Deductions	18,275
17.	Form 1040 Line 9 (Standard or Itemized Deduction)	18,350	Itemized deduction (18,275) is higher than the standard deduction (18,350 for head of household). Therefore itemized deduction will be considered.
18.	Taxable income	60,650
19.	Total Tax (Form 1040 Line 12a)	6,286	Tax amount calculated as per tax rates issued by IRS for the year 2019.