Description
Resources: Appendix C of McGraw-Hill's Taxation of Individuals and Business Entities, 2017 Edition; Form 1040; Form 1040 Instructions; IRS Publication; IRS website
Complete the Individual Tax Return Problem 1, Page C.
If information is missing, use reasonable assumptions to fill in the gaps. Form 1040, supporting tables, and instructions to the forms and schedules can be found at the IRS website.
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Individual Tax Return Problem 1
Required:
- Use the following information to complete Keith and Jennifer Hamilton’s 2015 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.
- Form 1040, supporting schedules, and instructions to the forms and schedules can be found at the IRS Web site (www.irs.gov).
Facts:
- Keith Hamilton is employed as an airline pilot for Flyby Airlines in Las Vegas, Nevada. Jennifer is employed as a teacher’s assistant at Small World Elementary School, in Henderson, Nevada. Keith and Jennifer live in a home they purchased this year. Keith and Jennifer have three children who lived with them all year, Joshua (17), Danielle (14), and Sara (10). Keith and Jennifer provided the following personal information:
- Keith and Jennifer do not want to contribute to the presidential election campaign.
- Keith and Jennifer do not claim itemized deductions.
- Keith and Jennifer live at 3678 Blue Sky Drive, Henderson, Nevada 89052.
- Keith’s birthday is 10/12/1970 and his Social Security number is 535-22-4466.
- Jennifer’s birthday is 7/16/1973 and her Social Security number is 535-44-2255.
- Joshua’s birthday is 6/30/1998 and his Social Security number is 454-54-5454.
- Danielle’s birthday is 8/12/2001 and her Social Security number is 343-43-4343.
- Sara’s birthday is 5/13/2005 and her Social Security number is 232-32-3232.Page C-1
- Keith received the following Form W-2 for 2015 from Flyby Airlines.
- Jennifer received the following Form W-2 for 2015 from Small World Elementary School.
- During 2015, Keith and Jennifer received $550 in interest from Las Vegas municipal bonds, $1,070 interest from U.S. Treasury bonds, and $65 from their savings account at SCD Credit Union. Keith and Jennifer are joint owners of the Las Vegas city bonds and the U.S. Treasury bonds. They have a joint savings account at SCD Credit Union.Page C-2
- On January 21, 2015, Jennifer was involved in a car accident. Because the other driver was at fault, the other driver’s insurance company paid Jennifer $1,350 for medical expenses relating to her injuries from the accident and $300 for emotional distress from the accident. She received payment on March 15, 2015.
- Keith’s father died on November 15, 2014. Keith received a $100,000 death benefit from his father’s life insurance policy on February 8, 2015.
- On February 15, 2015, Keith hurt his arm on a family skiing trip in Utah and was unable to fly for two weeks. He received $4,000 for disability pay from his disability insurance policy. He received the check on March 2, 2015. Flyby Airlines paid $600 in premiums on this policy during 2015. The disability insurance policy premiums are paid for by Flyby Airlines as a fully taxable fringe benefit to Keith (the premiums paid on his behalf are included in Keith’s compensation amount on his W-2).
- Jennifer’s grandmother died on March 10, 2015, leaving Jennifer with an inheritance of $30,000. (She received the inheritance on May 12, 2015.) Flyby Airlines had space available on its Long Island, New York, flight and provided Keith, Jennifer, and their three children with free flights so they could attend the funeral. The value of the ticket for each passenger was $600.
- On April 1, 2015, Jennifer slipped in the Small World Elementary lunchroom and injured her back. Jennifer received $1,200 in worker’s compensation benefits because her work-related injury caused her to miss two weeks of work. She also received a $2,645 reimbursement for medical expenses from the health insurance company. Small World Elementary pays the premiums for Jennifer’s health insurance policy as a nontaxable fringe benefit.
- On May 17, 2015, Keith and Jennifer received a federal income tax refund of $975 from their 2014 federal income tax return.
- On June 5, 2015, Keith and Jennifer sold their home in Henderson, Nevada, for $510,000 (net of commissions). Keith and Jennifer purchased the home 11 years ago for $470,000. On July 12, 2015, they bought a new home for $675,000.
- On July 25, 2015, Keith’s aunt Beatrice gave Keith $18,000 because she wanted to let everyone know that Keith is her favorite nephew.
- On September 29, 2015, Jennifer won an iPad valued at $500 in a raffle at the annual fair held at Joshua’s high school.
- Keith and Jennifer have qualifying insurance for purposes of the the Affordable Care Act (ACA).
Explanation & Answer
Attached.
Form
1040
2015
(99)
Department of the Treasury—Internal Revenue Service
U.S. Individual Income Tax Return
January 1
For the year Jan. 1–Dec. 31, 2015, or other tax year beginning
Your first name and initial
Last name
Keith
Hamilton
If a joint return, spouse’s first name and initial
Last name
Jennifer
Hamilton
OMB No. 1545-0074
December 31
, 2015, ending
IRS Use Only—Do not write or staple in this space.
See separate instructions.
, 20 15
Your social security number
5 3 5
4 5 4
Apt. no.
Home address (number and street). If you have a P.O. box, see instructions.
▲
3678 Blue Sky Drive
City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions).
Filing Status
Check only one
box.
Exemptions
2
3
✔
c
Spouse
.
Dependents:
Attach Form(s)
W-2 here. Also
attach Forms
W-2G and
1099-R if tax
was withheld.
If you did not
get a W-2,
see instructions.
Adjusted
Gross
Income
.
.
.
.
.
.
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.
.
Last name
.
.
.
5 4
-
5
Make sure the SSN(s) above
and on line 6c are correct.
child’s name here. ▶
5
Qualifying widow(er) with dependent child
.
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}
(4) ✓ if child under age 17
qualifying for child tax credit
(see instructions)
(3) Dependent’s
relationship to you
4 5 4 - 5 4 - 5 4 Son
3 4 3 - 4 3 - 4 3 Daughter
2 3 2 - 3 2 - 3 2 Daughter
Total number of exemptions claimed
-
the qualifying person is a child but not your dependent, enter this
(2) Dependent’s
social security number
Joshua
Danielle
Sara
d
Income
.
4
Head of household (with qualifying person). (See instructions.) If
Yourself. If someone can claim you as a dependent, do not check box 6a .
(1) First name
If more than four
dependents, see
instructions and
check here ▶
4
Single
Married filing jointly (even if only one had income)
Married filing separately. Enter spouse’s SSN above
and full name here. ▶
6a
b
-
Check here if you, or your spouse if filing
jointly, want $3 to go to this fund. Checking
Foreign postal code
a box below will not change your tax or
refund.
You
Spouse
Foreign province/state/county
1
2 2
Presidential Election Campaign
Henderson, Nevada 89052
Foreign country name
-
Spouse’s social security number
Boxes checked
on 6a and 6b
No. of children
on 6c who:
• lived with you
1
3
• did not live with
you due to divorce
or separation
(see instructions)
✔
Dependents on 6c
not entered above
✔
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7
$420,240
00
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8b
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8a
$1,685
00
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9a
10
11
Qualified dividends . . . . . . . . . . .
9b
Taxable refunds, credits, or offsets of state and local income taxes
Alimony received . . . . . . . . . . . . . . .
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10
11
$975
00
12
13
14
Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . .
Capital gain or (loss). Attach Schedule D if required. If not required, check here ▶
Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . .
.
12
13
14
$40,000
00
15a
16a
17
IRA distributions .
15a
b Taxable amount
. . .
130,000
00 b Taxable amount
Pensions and annuities 16a
. . .
Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E
15b
16b
17
130,000
00
18
19
20a
Farm income or (loss). Attach Schedule F . . .
Unemployment compensation . . . . . .
158,425
Social security benefits 20a
18
19
20b
21
22
Other income. List type and amount
Combine the amounts in the far right column for lines 7 through 21. This is your total income
21
22
$592,900
00
23
Educator expenses
24
Certain business expenses of reservists, performing artists, and
fee-basis government officials. Attach Form 2106 or 2106-EZ
25
Health savings account deduction. Attach Form 8889
.
24
25
26
27
28
Moving expenses. Attach Form 3903 . . . . . .
Deductible part of self-employment tax. Attach Schedule SE .
Self-employed SEP, SIMPLE, and qualified plans
. .
26
27
28
29
30
31a
Self-employed health insurance deduction
Penalty on early withdrawal of savings . .
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32
33
34
Alimony paid b Recipient’s SSN ▶
IRA deduction . . . . . . .
Student loan interest deduction . .
Tuition and fees. Attach Form 8917 .
29
30
31a
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32
33
34
35
36
37
Domestic production activities deduction. Attach Form 8903
35
Add lines 23 through 35 . . . . . . . . . . . . .
Subtract line 36 from line 22. This is your adjusted gross income
36
37
$0
$592,900
00
00
1040
(2015)
Wages, salaries, tips, etc. Attach Form(s) W-2
.
.
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.
8a
b
9a
Taxable interest. Attach Schedule B if required .
Tax-exempt interest. Do not include on line 8a .
Ordinary dividends. Attach Schedule B if required
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b
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b Taxable amount
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▶
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4
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7
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Add numbers on
lines above ▶
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23
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For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.
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▶
Cat. No. 11320B
Form
Page 2
Form 1040 (2015)
38
Amount from line 37 (adjusted gross income)
Tax and
Credits
39a
Check
if:
Standard
Deduction
for—
• People who
check any
box on line
39a or 39b or
who can be
claimed as a
dependent,
see
instructions.
• All others:
Single or
Married filing
separately,
$6,300
Married filing
jointly or
Qualifying
widow(er),
$12,600
Head of
household,
$9,250
.
.
Other
Taxes
58
59
60a
Unreported social security and Medicare tax from Form:
a
b
61
First-time homebuyer credit repayment. Attach Form 5405 if required
62
63
Form 8960 c
Taxes from: a
Form 8959 b
Add lines 56 through 62. This is your total tax . .
Payments
If you have a
qualifying
child, attach
Schedule EIC.
Sign
Here
Paid
Preparer
Use Only
.
You were born before January 2, 1951,
Spouse was born before January 2, 1951,
.
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Blind.
Blind.
.
}
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39b
42
43
Exemptions. If line 38 is $154,950 or less, multiply $4,000 by the number on line 6d. Otherwise, see instructions
Tax...