Assignment: Fill out tax forms 1040, 2016, Schedules A and B and any other necessary forms in order to compute net tax payable or refund due for the year 2015.
Information:
Adam and Cathy Elliott are married taxpayers who file a joint return. Their social security numbers are 123-45-6789 and 111-22-3333, respectively. Cathy’s birthday is October 5, 1978 and Adam’s is February 10th, 1968. They live at 123 Volusia Ave, Boston MA. Cathy is the manager for a health clinic located in MA. (employment ID #: 12345678). Adam is the manager of a restaurant, owned and operated by a company located in NY. (His employer identification number is 98765432).
The following information is shown on their Wage and Tax Statements (W-2) for 2015.
Line 1: Wages, tips, other compensation — Adam: 62400; Cathy: 68000
Line 2: Federal Income tax withheld — Adam: 6300; Cathy: 4500
Line 3: Social Security Wages — Adam: 62100; Cathy: 58000
Line 4: Social security tax withheld — Adam: 3850; Cathy: 3596
Line 5: Medicare Wages and tips — Adam: 62100; Cathy: 58000
Line 6: Medicare tax withheld — Adam: 900; Cathy: 841
Line 15: State — Adam: MA; Cathy: MA
Line 16: State wages, tips, etc. — Adam: 62100; Cathy: 58000
Line 17: State income tax withheld — Adam: 3100; Cathy: 2950
The Elliott’s provide over half of the support of their two children, Ashley (born Feb. 24th, 1990, SSN: 987654343), and Lauren (born March 17th, 1994, SSN: 987654222). Both children are full time students and live with the Elliot’s except when they are away at college. Ashley earned $4,200 from a summer internship in 2015 and Lauren earned $4,100 from a part-time job.
During 2015, the Elliott’s provided 60% of the total support of Adam’s widow mother, Carolyn Elliott (born April 11, 1937; SSN: 987652222) Carolyn lived alone and covered the rest of her support with her social security benefits. Carolyn died in September and Adam received life insurance proceeds of $800,000 on Dec. 26th, 2015.
The Elliott’s had the following expenses relating to their personal residence during 2015:
Property Taxes: 5000
Qualified interest on home mortgage: 8700
Repairs to roof: 5750
Utilities: 4100
Fire and Theft insurance: 1900
The Elliott’s also had the following medical expenses for 2015:
Medical insurance premiums: 4500
Doctor bill for Carolyn incurred in 2014 and not paid until 2015: 7600
Operation for Carolyn: 8500
Prescription medicines for Carolyn: 900
Hospital expenses for Carolyn: 3500
Reimbursement from insurance company received in 2015: 3600
The medical expenses for Carolyn represent most of the 60% that Adam contribute towards his mother’s support
Adam sold 300 shares of stock for $50 per share on May 25th, 2015. The Elliott’s had purchased the stock on April 6th, 2010 for $25 per share
Other relevant information:
When they filed their 2014 state return in 2015, the Elliott’s paid additional state income tax of $900
During 2015, Adam and Cathy attended a dinner dance sponsored by a qualified charitable organization. The Elliott’s paid $300 for the tickets. The cost of comparable entertainment would normally be $50.
The Elliott’s contributed $5000 to a church and gave used clothing (cost of $1200, Fair market value of $350) to the salvation army. All donations are supported by receipts and the clothing is in good condition.
In 2015, the Elliott’s received interest income of $2850 which was reported on a form 1099-INT from their bank
Cathy’s employer requires that all employees wear uniforms to work. During 2015, Cathy spent $850 on new uniforms and $566 on laundry charges
Adam paid $400 for an annual subscription to the Journal of restaurant management and $741 for annual membership dues to his professional association
Neither of the Elliott’s employers reimburse for employee expenses
The elliott od not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax
Everyone in the Elliott family had health care coverage for all months of 2015
Adam and Cathy paid no estimated Federal Income Tax other than what was withheld from their paychecks
