Question

Tax Return-Individual Project Three (after Chapter 8)

Instructions:

Please complete the 2018 federal income tax return for Bob and Melissa Grant. Ignore 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 gaps.

Bob (age 43) and Melissa (age 43) Grant are married and live in Lexington, Kentucky. The Grants have two children: Jared, age 15, and Alese, age 12. The Grants would like to file a joint tax return for the year.

The following information relates to the Grants’ tax year:

• Bob’s Social Security number is 987-45-1235 • Melissa’s Social Security number is 494-37-4893 • Jared’s Social Security number is 412-32-5690 • Alese’s Social Security number is 412-32-6940 • The Grants’ mailing address is 95 Hickory Road, Lexington, Kentucky 40502. • Jared and Alese are tax dependents for federal tax purposes

Bob Grant’s Forms W-2 provided the following wages and withholding for the year:

Employer Gross Wages Federal Income Tax Withholding State Income Tax Withholding National Storage $66,200 $8,000 $3,750 Lexington Little League $4,710 0 0

Melissa Grant’s Form W-2 provided the following wages and withholding for the year:

Employer Gross Wages Federal Income Tax Withholding State Income Tax Withholding Jensen Photography $44,500 $5,450 $2,225

All applicable and appropriate payroll taxes were withheld by the Grants’ respective employers. All the Grant family was covered by minimum essential health insurance during each month in 2018. The insurance was provided by Bob’s primary employer, National Storage.

The Grants also received the following during the year:

Interest income from First Kentucky Bank $130

Interest income from City of Lexington, KY Bond $450

Interest income from U.S. Treasury Bond $675

Interest income from Nevada State School Board Bond $150

Workers’ compensation payments to Bob $4,350

Disability payments received by Bob due to injury $3,500

• National Storage paid 100% of the premiums on the policy and included the premium payments in Bob’s taxable wages

Melissa received the following payments due to a lawsuit she filed for damages sustained in a car accident:

• Medical Expenses for physical injuries $2,500

• Emotional Distress (from having been physically injured) $12,000

• Punitive Damages $10,000 Total $24,500

Eight years ago, Melissa purchased an annuity contract for $88,000. She received her first annuity payment on January 1, 2018. The annuity will pay Melissa $15,000 per year for ten years (beginning with this year). The $15,000 payment was reported to Melissa on Form 1099-R for the current year (box 7 contained an entry of “7” on the form).

The Grants did not own, control or manage any foreign bank accounts nor were they grantors or beneficiaries of a foreign trust during the tax year.

The Grants paid or incurred the following expenses during the year:

Dentist/Orthodontist (unreimbursed by insurance) $ 10,500

Doctor fees (unreimbursed by insurance) $ 2,625

Prescriptions (unreimbursed by insurance) $ 1,380

KY state tax payment made on 4/15/18 for 2017 tax return liability $ 1,350

KY state income taxes withheld during 2018 $ 5,975

Real property taxes on residence $ 3,800

Vehicle registration fee based upon age of vehicle $ 1,250

Mortgage interest on principal residence $ 18,560

Interest paid on borrowed money to purchase the City of Lexington, KY municipal bonds $ 400

Interest paid on borrowed money to purchase U.S. Treasury bonds $ 240

Contribution to the Red Cross $ 1,000

Contribution to Senator Rick Hartley’s Re-election Campaign $ 2,500

Contribution to First Baptist Church of Kentucky $ 6,000

Fee paid to Jones & Company, CPAs for tax preparation $ 200

In addition, Bob drove 6,750 miles commuting to work and Melissa drove 8,230 miles commuting to work. The Grants have represented to you that they maintained careful logs to support their respective mileage.

The Grants drove 465 miles in total to receive medical treatment at a hospital in April.

The Grants both want to contribute to the Presidential Election Campaign Fund. The Grants would like to receive a refund (if any) of any tax they may have overpaid for the year. Their preferred method of receiving the refund by check. *******How I need this question answered is by filling the Tax Return Form 1040 of 2018 PLEASE!!!

Answer 1

ANSWER

$ 1040 o Department of the Trezzury - Internal Revenue Service 2018 U.S. Individual Income Tax Retum ONE N. 1545-8074 RS U Owly- Do not write or staple in this pace For Single Married filing jointly Married filing separately I Head of household Qualifying widower) Your first name and initial Last name Your social security number BOB GRANT 987 45 1235 Your standard deduction: Someone can claim you as a dependent You were born before January 2, 1954 You are blind If joint return, spouse's first name and initial Last name Spouse's social security number MELISSA GRANT 494 37 4893 pouze standard deduction || Someone can claim your spouse as a dependent Spouse was born before January 2, 1954 Pull-year health care coverage exempt (seen) | Spouse is blind || Spouse itemizes on a separate return or you were dual-status alien Home address (number and street). If you have a P.O.box, see instructions. Apt no. Presidential Election Campaign. 95 HICKORY ROAD szeinet) xl You Spouse City, town or post office, state, and ZIP code. If you have a foreign address, attach Schedule 8. If more than four dependents, LEXINGTON, KY 40502 see inst, and there Dependents (see instructions): (2) Social security number (3) Relationship to you (4) fquales to see inct (1) First name Last name Child tax credt Credit for other dependents JARED GRANT 412-32-5690 SON ALESE GRANT 412-32-6940 DAUGHTER Sign Here Joint return? See instructions Keep a copy for Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are rue correct, and complete. Declaration of proper other than taxpayer) bazed on all information of which preparere any knowledge. Your occupation JT the RS sent you an Identy Protection Pil. enter there Spouze's signature. I a joint return, both med sin Spouse's occupation T the RS sent you an identity Protection P . Preparer's name Check it Paid Preparer Use Only 3d Paty Designee Self-employed Firm's name Firm's address LHA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2018)

Form 1040 (2018) BOB & MELISSA GRANT 987-45-1235 Page 2 1 Wages, salaries, tips, etc. Attach Form(s) W-2 ....... STMT 1 | 1 115,410. 2a Tax-exempt interest... b Taxable interest 2b 1,405. Auch F W-2 Albo atach 3a Qualified dividends ..... b Ordinary dividends Forms) W-20 and RAS pensions, and annuities b Taxable amount 4b 1099-Rita 15,000. withheld 5a Social security benefits ... b Taxable amount Total income. Add lines 1 through s. Add any amount from Schedule 1, line 22 10,000.16 141.815. 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 8; otherwise, H Deduction for L subtract Schedule 1, line 38, from line 8 141,815. Singleormatied 8 Standard deduction or itemized deductions (from Schedule A) 40,153. fling separately, Qualified business income deduction (see instructions) Married fing 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter-O-.. 101,662. 11 Qualifying a Tax 14, 245. check Fam 2 Form 121299. any front U8814 EU4972 b Add any amount from Schedule 2 and check here 14, 245. 12 a Childt gestaedroodroegent 4 ,000. b Add any amount om Schand check here 12 4,000. 13 Subtract line 12 from line 11. If zero or less, enter-O- 10,245. 14 Other taxes. Attach Schedule 4 15 Total tax. Add lines 13 and 14 16 Federal income tax withheld from Forms W-2 and 1099 17 Refundable credt: a EIC seeint.) bsch 8812 C Forn 8863 Add any amount from Schedule 5 18 Add lines 16 and 17. These are your total payments ........... 18 13,450. 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid. 193 ,205. Refund 20a Amount of line 18 you want refunded to you. If Form 8888 is attached, check here ....... 2013 , 205. b Routing number Type: Checking Drst depozit? Savings See instructions. d Account number 21 Amount of line 18 you want applied to your 2019 estimated tax 21 Amount You 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions Owe 23 Estimated tax penalty (see instructions) Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2018) 19,296.

18 Farm 19 SCHEDULE 1 Additional Income and Adjustments to Income | OMB No. 15-45-0074 (Form 1040) 2018 Attach to Form 1040. Department of the Treasury Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Segmencerto 01 Name(s) shown on Form 1040 Your social security number BOB & MELISSA GRANT 987-45-1235 Additional 1-95 Reserved Income 10 Taxable refunds, credits, or offsets of state and local income taxes 10 11 Alimony received ...... 12 Business income or loss). Attach Schedule C or C-EZ 13 Capital gain or loss). Attach Schedule D if required. If not required, check here 14 Other gains or losses). Attach Form 4797 15a Reserved 16a Reserved 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17 Farm income or loss). Attach Schedule F 19 Unemployment compensation 20a Reserved 200 21 Other income. List type and amount STATEMENT 3 | 21 10,000. 22 Combine the amounts in the far right column. If you don't have any adjustments to income, enter here and include on Form 1040, line 8. Otherwise, go to line 23 10,000. Adjustments 23 Educator expenses. to Income 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 Health savings account deduction. Attach Form 8889 28 Moving expenses for members of the Armed Forces. Attach Form 3903 Deductible part of self-employment tax. Attach Schedule SE... 28 Self-employed SEP. SIMPLE, and qualified plans 28 Self-employed health insurance deduction 30 Penalty on earty withdrawal of savings 31a Alimony paid b Recipient's SSN 32 IRA deduction 33 Student loan interest deduction 34 Reserved 35 Reserved 36 Add lines 23 through 35 ... LHA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 1 (Form 1040) 2018 27 8 8 8 8 8 8 37

Itemized Deductions OBNO 1545-0074 SCHEDULE A (Form 1040) ►Go to www.irs.gov/Schedule A for instructions and the latest information. Attach to Form 1040. Caution: If you are claiming a net qualified disaster loss on Form 46.84, see the instructions for line 16. 2018 Acadette 07 Department of the Treasury Innal e l Names) shown on Form 10-40 Your social security number 987 45 1235 1 14,589. 10,636. 4 3 ,953. BOB & MELISSA GRANT Medical Caution: Do not include expenses reimbursed or paid by others. and 1 Medical and dental expenses (see instructions) SEE STATEMENT 7 Dental 2 Enter amount from Form 1040, line 7 2 141,815. Expenses 3 Multiply line 2 by 7.546 (0.075). 4 Subtract line 3 from line 1. If line 3 is more than line 1. enter -- 5 State and local taxes. Paid a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box.... SEE STATEMENT 4. 0 b State and local real estate taxes (see instructions) c State and local personal property taxes d Add lines 5a through 5c e Enter the smaller of line 5d or $10,000 ($5.000 if married filling separately) .... 6 Other taxes. List type and amount 5a 50 7,325. 3,800. 1,250. 12,375. 50! 10,000. 7 10,000. Interest You Paid Caution: Your mortgage interest deduction may be limited (see instructions 7 Add lines 5e and 6 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box a Home mortgage interest and points reported to you on Form 1098 b Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8a 18,560. 560. 640. 10 19,200. 7,000. STMT 5 c Points not reported to you on Form 1098. See instructions for special rules d Reserved e Add lines 8a through 8c 9 Investment interest. Attach Form 4852 if required. See instructions SEE STATEMENT 6 10 Add lines 8e and 9 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, Charity see instructions If you made a 12 Other than by cash or check. If any gift of $250 or more, see gift and got a instructions. You must attach Form 8283 if over $500 13 see Instructions. 13 Carryover from prior year 14 Add lines 11 through 13 Casualty and 15 Casualty and theit lossles) from a federally declared disaster (other than net qualified Theft Losses disaster losses). Attach Form 4884 and enter the amount from line 18 of that form. See instructions Other 16 Other - from list in instructions. List type and amount -- - - - - - - - - - -- - - itemized Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Itemized Form 1040, line 8 Deductions 18 you elect to itemize deductions even though they are less than your standard deduction, check here ................. LHA 819501 11-29-18 For Paperwork Reduction Act Notice, see the instructions for Form 1040. 14. 7,000. SUL SESSO RES ESCOLES - - - - 17. 40,153. Schedule A (Form 1040) 2018

I OB No. 1545-0074 SCHEDULE B (Form 1040) Department of the Treasury Internal Revenue Service (99 Name shown on retum Interest and Ordinary Dividends Go to www.irs.gov/Schedule for instructions and the latest information. Attach to Form 1040. 2018 equence he 09 social security number 987 45 1235 Amount BOB & MELISSA GRANT Partl 1 List name of payer. If any interest is from a seller-financed mortgage and the buyer used the Interest property as a personal residence, see the instructions and list this interest first. Also, show that buyer's social security number and address FIRST KENTUCKY BANK CITY OF LEXINGTON, KY BOND US TREASURY BON NEVADA STATE SCHOOL BOARD BOND 130. 450. 675. 150. Note: If you received a Form 1099-INT Form 1090-OID or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. 1,405. 2 Add the amounts on line 1 .... 3 Excludable interest on series EE and I U.S. Savings bonds issued after 1989. Attach Form 8815 4 Subtract line 3 from line 2. Enter the result here and on Form 1040, line 2b ... Note: If line 4 is over $1,500, you must complete Part III. 5 List name of payer _ 1,405. Amount Part II Ordinary Dividends Note: If you received a Form 1090-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. 8 Add the amounts on line 5. Enter the total here and on Form 1040, line 3b Note: If line 8 is over $1,500. you must complete Part II. Part III You must complete this part if you (a) had over $1.500 of taxable interest or ordinary dividends; (b) had a foreign account: or (c) received a distribution from, or were a grantor of, or a transferor to a foreign trust. Foreign 7a At any time during 2018, did you have a financial interest in or signature authority over a financial account (such Accounts as a bank account, securities account, or brokerage account) located in a foreign country? See instructions ........ and If "Yes,' are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Trusts to report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing requirements and exceptions to those requirements b If you are required to file FNCEN Form 114, enter the name of the foreign country where the financial account is located 8 During 2018, did you receive a distribution from, or were you the grantor of, or transferorto, a foreign trust? 827501 10-24- 18 F "Yes, you may have to file Form 3520. See instructions LHA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule B (Form 1040) 2018

OMB No. 1545-0191 Form 4952 Investment Interest Expense Deduction Go to www.irs.gov/Form4952 for the latest information Attach to your tax return 2018 Department of the Treasury Internal Revenue lence (99) Attachment 51 Name(s) shown on return Identifying number 987-45-1235 BOB & MELISSA GRANT Part Total Investment Interest Expense 1 Investment interest expense paid or accrued in 2018 (see instructions .... SEE STATEMENT 8... 2 Disallowed investment interest expense from 2017 Form 4952, line 7 40 3 Total investment interest expense. Add lines 1 and 2 Part II Net Investment Income 4a Gross income from property held for investment (excluding any net gain from the disposition of property held for investment) ..........STMT 9 4 11,405. b Qualified dividends included on line 4a c Subtract mine 4b from line 4a 4c 11,405. d Net gain from the disposition of property held for investment e Enter the smaller of line 4d or your net capital gain from the disposition of property held for investment (see instructions) f Subtract line 4e from line 4d 9 Enter the amount from lines 46 and 4e that you elect to include in investment income (see instructions) h Investment income. Add lines 4c, 4f, and 4g 11,405. 5 investment expenses (see instructions ............................ 11,405. 8 Net investment income. Subtract line 5 from line 4h. If zero or less, enter-O- Part III Investment Interest Expense Deduction 7 from line 3. Disallowed investment interest expense to be carried forward to 2019. Subtract line If zero or less, entero- ... STMT 10 8 8 LHA Investment interest expense deduction. Enter the smaller of line 3 or B. See instructions For Paperwork Reduction Act Notice, see separate instructions. 640. Form 4952 (2018)

BOB & MELISSA GRANT 987-45-1235 SCHEDULE 1 MISCELLANEOUS INCOME STATEMENT 3 DESCRIPTION AMOUNT PUNITIVE DAMAGES 10,000. TOTAL TO SCHEDULE 1, LINE 21 10,000. SCHEDULE A STATE AND LOCAL INCOME TAXES STATEMENT 4 DESCRIPTION AMOUNT NATIONAL STORAGE JENSEN PHOTOGRAPHY KENTUCKY PRIOR YEAR BALANCE DUE AND EXTENSION PAYMENTS 3,750. 2,225. 1,350. TOTAL TO SCHEDULE A, LINE 5A 7,325. SCHEDULE A CASH CONTRIBUTIONS STATEMENT 5 DESCRIPTION AMOUNT 100% LIMIT AMOUNT 60% LIMIT AMOUNT 30% LIMIT RED CROSS FIRST BAPTIST CHURCH OF KENTUCKY 1,000. 6,000. SUBTOTALS 7,000. TOTAL TO SCHEDULE A, LINE 11 7,000 SCHEDULE A INVESTMENT INTEREST STATEMENT 6 DESCRIPTION AMOUNT CITY OF LEXINGTON 640. TOTAL TO SCHEDULE A, LINE 9

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BOB & MELISSA GRANT 987-45-1235 SCHEDULE A MEDICAL AND DENTAL EXPENSES STATEMENT 7 DESCRIPTION AMOUNT DOCTORS, DENTISTS, ETC. DOCTOR FEES PRESCRIPTION MEDICINES AND DRUGS TRANSPORTATION 10,500. 2,625. 1,380. 84. TOTAL TO SCHEDULE A, LINE 1 14,589.

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