Review individual tax information for Magdalena Schmitz in Magdalena’s Taxes document.

Discuss Magdalena’s tax facts with your team.

Complete the 2014 federal income tax return for Magdalena.

Prepare a 700-1,050-word memo to Magdalena with an overview of her tax position this year and tax planning considerations for next year you, as her tax advisors, will present to her at your next scheduled meeting.

niversity of Phoenix Material

Taxes: Week 2 Team Assignment


Please review individual tax information
for Magdalena Schmitz below. As a team, discuss and complete the 2014 federal
income tax return for Magdalena.

Once Form 1040 is completed, prepare a 700-1050-word memo to
Magdalena with an overview of her tax position this year and tax planning
considerations for next year you, as her tax advisors, will present to her at
your next scheduled meeting.

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

Magdalena Schmitz has undergone some major
changes in her life recently. In 2012, at the age of 46, her husband, Roger,
passed away. Magdalena has not remarried as of the end of 2014. Magdalena
currently lives in Bedford, Pennsylvania. She was living in Pittsburgh when her
husband passed away, but she moved back to her childhood home so she could get
help from her family raising her children.
Magdalena was employed in Pittsburgh early in the year, but left that
job and relocated 100 miles away to pursue a new life and start her new job.
Magdalena has three children (ages as of the end of the year): Alyssa (23),
Tyler (16), and Connor (11). Magdalena would like to determine her federal
income tax under the filing status that is most advantageous for her.

Magdalena reported the following

  • Magdalena’s social security number is
  • Alyssa’s social security number is
  • Tyler’s social security number is
  • Connor’s social security number is
  • Magdalena’s mailing address is 623 S.
    Liberty Road Bedford, Pennsylvania 15522

Alyssa is unmarried and a full-time
graduate student at Pennsylvania State University (PSU) (EIN 33-9876543). PSU’s
address is 1250 Happy Valley, State College, PA 16801. She received her
bachelor’s degree the year her father passed away. This year represents her
fifth year of full-time higher education schooling. Alyssa works part-time in
State College to help with some of her living expenses. Alyssa earned $2,300 in
gross income during the year and had her income tax return prepared on campus
by Volunteer Income Tax Assistance (VITA) volunteers. Magdalena provided
support for Alyssa including paying for rent, books, tuition, food, clothes,
medicine, and other support items. In total, Magdalena provided $12,700 of
support for the year. PSU provided Alyssa with a Form 1098-T at year end.

Alyssa’s higher education expenses for her
university studies were as follows:

Tuition $6,500

Books $2,000

In order to permit Magdalena to maintain a
full-time job, she sends Connor to a day care program after school five days a
week. During the year, Magdalena paid the day care operator $4,250 for Connor’s

The day care details are as follows:

Day Care

S. Patriot Road

PA 15522


Magdalena incurred the following
moving-related expenses during the year:

items $3,200

in transit 150

hunting trip $1,350

In addition, she drove her car the 100
miles to Bedford as part of the move. Her previous workplace was located 10
miles from the previous home she was renting and her new job is exactly 100
miles away from her prior residence.

Magdalena’s W-2s for the year reported the



Income Tax Withholding

Income Tax Withholding

Development Corporation




Pittsburgh Real




Magdalena’s employers withheld all
applicable and appropriate payroll taxes. The entire Schmitz family was covered
by minimum essential health insurance during each month in 2014. The insurance
was provided by Magdalena’s employers.

On January 1, 2013 (prior year), Magdalena
started a photography business in which she takes bridal and wedding
photographs. She does not do any of the professional printing. However, she
provides all of the original negatives to her clients on a password-protected
web site as part of her service. This unique service, along with her skill and
reputation, has allowed her to earn additional money on the weekends, primarily
in the summer, to help support her daughter in college. Magdalena rents all of
the camera equipment from a friend and does not currently own any equipment
herself. The photography business uses the cash method of accounting. The
business did not have any obligation to file a Form 1099 to any payee during
the year. Magdalena reported the following revenue and expenses for her
business for the year:

Gross Revenue $ 6,500

Photographic supplies $ 430

Camera rental $ 1,050

Web site hosting fee $

Magdalena also received the following
during the year:

Life Insurance Payment-Mutual Life
(Mother’s passing) $ 150,000

Cash gift from her father $

Interest income-First Bank of Bedford $ 310

Interest income-General Electric Bond $ 3,200

Interest income-Bedford School District Municipal
Bond $ 2,500

Interest income-Johnstown Rural Improvement
District Bond $ 1,300

PA state income tax refund* $ 325

*Refund was from state tax she paid last
year. Magdalena deducted all of her state taxes as itemized deductions, and
received full tax benefit for the deductions, on her prior year federal tax

Magdalena did not own, control, or manage
any foreign bank accounts, nor was she a grantor or beneficiary of a foreign
trust during the tax year.

Magdalena paid or incurred the following
expenses during the year:

Dentist (unreimbursed by insurance) $ 1,500

Doctors (unreimbursed by insurance) $ 475

Prescriptions (unreimbursed by insurance) $ 255

Real property taxes on residence $ 950

Vehicle registration fee based upon age of
vehicle $ 175

Mortgage interest on principal residence
(Form 1098 received) $ 6,845

Contribution to the American Lung
Association $ 600

Contribution to the Habitat for Humanity $ 1,000

Contribution to Methodist Church of PA $ 3,000

Contribution to Penn State University $ 400

Magdalena wants to contribute to the
Presidential Election Campaign. She would like to receive a refund (if any) of
any tax she may have overpaid for the year. Her preferred method of receiving
the refund is by check