Question

Please complete the 2018 federal income tax return for Sarah Hamblin. Be sure to include only required tax forms when completing the tax return. For purposes of this assignment, unless instructed otherwise, you do not need to attach Form 8582. Also, ignore the requirement to attach the Form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps. Sarah Hamblin and her now ex-husband Kevin were legally divorced on March 1, 2018. As of the end of the year, Sarah was unmarried. Sarah and Kevin had only one child, an 11-year-old girl named Elizabeth. As part of the divorce decree, Sarah was given custody of Elizabeth and Kevin was required to pay 1) child support for Elizabeth’s care, and 2) alimony to Sarah until she remarries or dies. Because Kevin will be making child support payments, the divorce decree provided that Kevin will be permitted to claim the tax dependency exemption for Elizabeth until Elizabeth no longer qualifies as a tax dependent of either parent and the decree obligates Sarah to sign and/or file any required forms to cause this result to occur. Sarah rents a home (separate from Kevin) that she pays for herself. Elizabeth lives with Sarah most of the time, but she visits and stays with her father every other weekend and most holidays. During the year, Elizabeth stayed at Kevin’s house a total of 74 nights. Sarah provided the following information for 2018: • Sarah’s Social Security number is 123-43-4321 • Elizabeth’s Social Security number is 123-34-1234 • Sarah’s mailing address is 1245 Rose Petal Drive, Middletown, Wisconsin 53562 • Elizabeth is a U.S. citizen The following was reported on Sarah’s Form W-2: Employer Gross Wages Federal Income Tax Withholding State Income Tax Withholding Central Wisconsin Heating and Air 34,350 6,950 2,125 All applicable and appropriate payroll taxes were withheld by the employer. During the year, Sarah also received the following: Child Support Payment from Kevin Hamblin

Answer 1

Question 1
Interpretations
1. Child support income will not be included in the gross calculation income
		Computation of Adjusted gross income
		Particulars	(Amount in $)	Remarks
		Salary income	34350
		Other income-
		Alimony amount received	16000
		Child support payment	-	Not taxable
		Interest income from U.S. treasury bond	400
		Help from father for legal payments	8500
		Interst payment from Madison bond	250
		Life insurance payment on death of mother	-	Not taxable
		Interst income from bank	165
		Total Income	59665
		Above the line deductions-	0
		Adjusted Gross Income	59665
Taxable income
Tax slab applicable
0	$    9,700	10% of taxable income	970
$    9,700	$ 39,475	$970 plus 12% of the excess over $9,700	3573
$ 39,475	$ 84,200	$4,543 plus 22% of the excess over $39,475	-8684.06
		Total tax	8984.8
		Taxes paid	9075
		Refund	90.2