US Income tax preparation

Business Finance

income tax

El Centro College

Question Description

The information tells each tax forms to fill up. If you need the tax form i can upload it.

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Part 1 2018 Form 1040 Page 1 & 2 Sherman and Susan William were married in 2010 and file a joint federal income tax return. Sherman was born on September 15, 1978 and Susan was born on February 14, 1977. They have one son, Sam. who was born on Susan’s birthday in 2011. Sam. is their dependent, they support him 100%, and has lived with them the entire year of 2018. The William family resides at 123456 Street, Frisco, TX, 65489 Social Security# Sherman William SS# 111-22-3333 Susan William SS# 111-22-4444 Sam SS# 111-22-5555 2018 Form 1040 Schedule B 2018 Chase Bank 1099-INT 2018 Dallas City Municipal Bond Interest 1099-INT 2018 Fidelity Magellan Fund Dividends 1099-DIV $ 44 $ 1000 $ 475 Part 2 (W-2) Sherman William works for Imagination, LLC as a graphic artist and is paid wages with the appropriate taxes withheld. His 2018 W-2 information (which is reported on Form 1040 Page 1 Lines 1 and 16. Federal Taxable Wages = $ 66,000 Federal Income Tax Withheld = $ 9,000 Sherman and Susan Itemized Deductions (Schedule A) If the Schedule A exceeds the standard deduction of a married, filing jointly taxpayer(s) then line 17 Sch A is carried to 1040 Page 2 Line 8 Sherman, Susan and Sam are covered by health insurance, paid for through Sherman’s W-2 job. They do have $1,300 of out-of-pocket Dental and Medical expenses which need recorded on Schedule A. Line 1. Follow the instructions on schedule A using either .075 or .10 (revised 2018 % limitation for line 3. They own their home at pay $7,200 of real estate taxes per year. They pay no other state or local income taxes as residents of Texas. The William’s pay mortgage interest of $17,235, on their home mortgage ($300,000 mortgage balance, original mortgage loan borrowing was $375,000). They pay no points or other deductible interest. Cash gifts to the William’s house of worship, made in 2018, was $5,000. They also donated household goods to Goodwill at a fair value of $165. Susan William (Schedule C) Susan William owns a flower shop. She is self-employed. Her flower shop advertises under the name “Basket full of Posies” and is located at 123456 street, Frisco TX 65489. Susan has an EIN 45-1234567. Look up her principal business classification and code on, Form Schedule C Instructions. Susan works alone and has no one for which she is required to file forms 1099. Cash Basis Income and Expenses: Gross receipts Sales discounts Beginning inventory of flowers Ending inventory of flowers Purchases of flowers during 2018 Advertising Depreciation Cash Basis Income and Expenses: Gross receipts $ 75,000 Sales discounts 250 Beginning inventory of flowers 2,225 Ending inventory of flowers 750 18,500 Purchases of flowers during 2018 Advertising 1,200 Depreciation (Depreciation will be calculated for her store equipment in Chapter 10) Insurance 450 Professional fees 750 Office expenses 425 Repairs and Maintenance 335 Supplies 1,315 Licenses 25 Utilities 780 Other Expenses: 1,250 Amortization of flower shop franchise Susan William (Schedule E) Susan receives $ 350 per month Royalties income from a natural gas property in Tecumseh, Oklahoma (Page 1, Part I, Property A) Susan received a Form 1120S Sub-Chapter S Corporation K-1 from her family business, Sow and Seeds, LLC (EIN 251234567). Her share of nonpassive ordinary income for 2018 was $ 5,235 (Page 2, Part II, Property A) Part 3 Part 3 Sherman and Susan William Sales of Capital Assets All sales were reported on Form 1099-B and basis was reported to the IRS December 15, 2006 Purchased 1,000 Shares of Walmart (WMT) stock @ $46 January 12, 2018 Purchased 500 Shares of FB stock @ $179 per share November 9, 2018 Sold 300 Shares of Facebook (FB) stock @ $145 per share November 9, 2018 Sold 500 Shares of Walmart (WMT) Stock @ $106 Susan William (Schedule C) Susan William’s sole proprietorship acquired, in 2018, the following assets: February 17, 2018 September 1, 2018 December 5, 2018 Shop Furniture & Fixtures Delivery Van Computers $ 17,000 $ 21,000 $ 4,000 She has elected to sue the 200% declining balance method and half-year convention to compute depreciation and record it on Form 4562. She elects to take NO Bonus depreciation but does elect Sec. 179 depreciation on her Computers. Susan William – Sole-proprietor additional information Susan deposited $5,000 to her IRA (Adjustment to Income item Schedule 1) Determine if Susan is eligible for the IRA Saver’s Credit Susan paid $1,000 1040-ES Each of the due dates (4/15/18, 6/15/18, 9/15/18 and 1/15/19) for credit toward federal tax and self-employment tax due on profits in her flower shop. (Schedule 5) Sam William. – Dependent Son Review Part 1 to determine the age of Sam William. Steps to Complete the Tax Return (Review Chapters 4 & 6 for a refresher of the info) Complete Schedule 1. You should have 3 sources of Additional Income: Sch C, Sch D, Sch E And 2 sources of Adjustments to Income: Deductible part of SE tax, Susan’s IRA. Carry Schedule 1 Line 22 to Form 1040 Page 2 Calculate AGI Line 7 (Hint: You need to deduct the Schedule 1 Adjustments from Total Income) Form 1040 Page 2 Line 8: Determine if you will use a Standard Deduction of Schedule A Itemized Deductions. Form 1040 Page 2 Line 9: Calculate the Qualified Business Income DeductionQBID Worksheet & Form 1040 Instructions Form 1040 Page 2 Line 11: Calculate the Tax liability using the Qualified Dividends and Capital Gain Tax Worksheet attached. There are no “Qualified Dividends,” however, there are Long Term Capital Gains which receive preferential tax treatment. Form 1040 Page 2 Line 12: Determine if the Chardon’s are eligible for the Child Tax Credit Form 1040 Page 2 Lines 13-20a. Complete the final calculation of the tax due or refund amount. ...
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