Question

Required:

• Use the following information to complete Rhonda Hill’s 2018 federal income tax return. If any information is missing, use reasonable assumption to fill in the gaps.
• The forms, schedules and instruction can be found at the IRS website. The instruction can e helpful in completing the forms.

Facts

1. Rhonda Hill (unmarried) is employed as an office manager at the amin office of Carter and Associates CPA firm. Rhonda lives in a home she purchased 20 years ago. Rhonda’s older cousin Mabel Wright lives with Rhonda in the home. Mabel is retired and received $2400 of provided Social Security payments each year. Mabel is able to save this money because Rhonda provides all of Mabel’s support.   Rhonda also provided the following information.

• Rhonda does not want to contribute to the presidential election campaign.
• Rhonda lives at 1234 Blue Ridge Way, Tulsa, Oklahoma 74101
• Rhonda’s birthday is 12/18/1954 and her Social security number is 335-67-8910
• Mabel’s birthday is 11/2/1945 and her Social Security number is 566-77-8899
• Rhonda does not have any foreign bank accounts or trusts.
• Rhonda has qualifying insurance for purposes of the Affordable Care act (ACA)

2. Rhonda received a Form W-2 from Carter and Associates (her employer) that contained the following information.

Line 1 Wager, tips, other compensation                 $72,000

Line 2 Federal Income Tax withheld                         $9300

Line 3 Social Security Wagers                                      $72,000

Line 4 Social Security tax withheld                            $4464

Line 5 Medicare wages and tips                                 $72000

Line 6 Medicare tax withheld                                      $1044

Line 16 State wages, tips, etc.                                     $72000

Lien 17 State income tax                                               $2700

• Carter and Associates address is 1234 CPA Way tulsa, Oklahoma 74101; its FEIN is 91:0001002 and its state id number is 123456678

3. Rhonda received $250 in interest from Tulsa city bonds, $120 interest from IBM bonds, and $15 from her savings account at UCU Credit Union. She also received a $460 dividend from Huggies Company and %500 from bicker Corporation. Both dividends are qualified dividends.

4. Rhonda sold 200 shares of DM stock for $18 a share on June 15, 2018. She purchased the stock on December 12, 2013, for $10 a share. She also sold 50 shares of RSA stock for $15 a share on October 2, 2018. She purchased the stock for $65 a share on February 2, 2018. Stock basis amounts have been reported to the IRS.

5. The following is a record of the medical expenses that Rhonda paid for herself during the year. The amounts reported are amounts she paid in excess of insurance reimbursements. Rhonda drove 210 miles for medical purposes in 2018.

Insurance premium                         $3700

Prescription medications              100

Over the counter medicatins       250

Doctor and dentist visits                1450

Eyeglasses                                          300

Physical therapy                               200

6. Rhonda paid $6800 in mortgage interest during the year to UCU credit union (reported to her on Form 1098). She also paid $1240 in real property taxes during the year.

7. Rhonda contributed $5400 to heavenly Church during the year. Heavenly Church’s address is 12342 Religion Way, Tulsa, Oklahoma 74101.

*****What form need to be filled out????*****

Answer 1

Solution:

Wages tips other compensation 72000

Social security wages 72000

Medicine waes and tips 72000

State wages tips etc 72000

Interest = (250 + 15 + 120 ) 385

Total (A) 72000

Taxes withheld 9300

Social securiy tax withheld 4464

Medicine tax withheld 1044

state income tax 2700

Total (B) 17500

Capital gain tax :

Purchased on 12/12/2018 = 200 @ 10/ share = 2000

Sold on 15/6/2023 ----- 200 @ 18/share

Capital gain tax @ 15% = (-) - 240

Dividend as are quantified. Hence not taxable.

Mottgage interest 2800

Red property tax 1200

Contribution = (2350 x 25/100) 587.5

Total 4587.5

Medical Expenses:

Insurance premium 3700

Prescription and medication 100

Over the counter medicines 250

Doctor and dentist visits 1480

Eye glasses 300

Physical theraphy 200

Total 6000 Eligible

(72000) x 10% = 7200

6.1412.5

Net Income = (7200-45875-600)

Tax liability = 9067

Tax withheld 17508

Capital gain tax 240

Total 8681

REFUND = 8681

D