Question

• Oscar and Patricia are married and want to file a joint return. Patricia receives Social Security disability benefits.

• Oscar and Patricia have eight-year-old twins, Guillermo and Maria, who lived with them the entire year .

• Patricia is receiving a disability pension from her former employer . She has not reached minimum retirement age .

• Oscar was deployed to Qatar and entered a combat zone on April 20, 2019 and is scheduled to return to the U .S on April 15, 2020 .

• Oscar has rental property, which he placed into service in 2016

• Rental property:

  • – Oscar is an active participant .

  • – Single family residence, 3571 Oak Street, Your City, Your State .

  • – Purchased property: 06/03/2009 .

  • – Rented: 1/1/2019 - 12/31/2019 .

  • – Annual rental income: $13,500 .

  • – Insurance: $1,500 .

  • – Management fees: $950 .

  • – Oscar paid $625 to replace a broken doorbell, shower head, leaky faucet and unclog drains . He learned how to complete these repairs after watching Do-It- Yourself videos on the internet . He estimates his time for completing the repairs is worth $1,000, which is equivalent to professional electrician and plumber labor cost .

  • – Real estate property tax: $1,500 .

  • – Mortgage Interest: $3,625 .

  • – Depreciation: $2,000 .

  • – Oscar did not make any payments that would require him to file Form 1099.

• Oscar and Patricia did not itemize last year and do not have enough deductions to itemize this year .

• 13. What is the amount of the Hernandez’s earned income credit?

  A. $1,285 B. $2,466 C. $5,828 D. $3,400 14. The net rental income (rental income minus expenses) is figured using Schedule E and reported as rental income on Form 1040, Schedule 1, Additional Income and Adjustments to Income. True False 15. Oscar cannot take a rental expense deduction for which of the following items? A. Depreciation B. Repairs C. Management fees D. Value of his labor

Answer 1

13- option c- $ 5828

$ 5828 IS FOR THOSE WHO FILLED JOINTLY AND HAVE 2 CHILDREN.

14- true

15- option D- VALUE OF HIS LABOR

THE VALUE OF HIS LABOR IS NOT A DEDUCTABLE EXPENSES AS NO PAYMENT IS MADE TO OUTSIDER FOR THE WORK AND HENCE IT IS NOT A RENTAL EXPENSES.