Question

Shady Slim / Comprehensive Deductions Problem Read the following letter and help Shady Slim with his tax situation. Assume that gross income is $172,900 (which consists only of salary) and ignore AGI thresholds for purposes of this problem. December 31, 2020 To the friendly student tax preparer: Hi, it’s Shady Slim again. I just got back from my 55th birthday party, and I’m told that you need some more information from me in order to complete my tax return. I’m an open book! I’ll tell you whatever I think you need to know. I had to move this year after getting my job at Roca Cola. I moved on February 3 of this year, and I worked my job at Roca Cola for the rest of the year. I still live in the same state, but I moved 500 miles away from my old house. I hired a moving company to move my stuff at a cost of $2,300, and I drove in my car. I got a hotel room along the way that cost us $65 (I love Super 8!). Can you believe I’m still paying off my student loans, even after 15 years? I paid a total of $900 in interest on my old student loans this year. Since Roca Coca (my employer) never started a retirement plan, I decided I should probably start saving for my golden years. I contributed $3,000 to what the bank referred to as a regular IRA (or was it a REM?). Oh yeah. I also did a little investing this year. I bought a limited partnership interest in Duds, Ltd. For $10,000. I thought it was going to be a real winner, but this year they took a bath. My portion of the loss was $8,000. Well, at least I did not actually do any work for Duds, and I get the tax deduction - right? Remember when I told you about that guy that hit me with his car? I had a bunch of medical expenses that were not reimbursed to me by the lawsuit or by my insurance. I incurred a total of $20,000 in medical expenses, and I was only reimbursed for $11,000. Good thing I can write off medical expenses, right? I contributed a lot of money to charity this year (and have receipt documentation for all contributions). I’m such a nice guy! I gave $1,000 in cash to the March of Dimes. I contributed some of my old furniture to the church. It was some good stuff! I contributed a red velvet couch and my old recliner. The furniture is considered vintage and is worth $5,000 today (the appraiser surprised me!), even though I only paid $1,000 for it back in the day. When I contributed the furniture, the pastor said he didn’t like the fabric and was going to sell the furniture to pay for some more pews in the church. Oh well, some people just have no taste, right? Roca Cola had a charity drive for the United Way this year and I contributed $90. Turns out, I don’t even miss it because Roca Cola takes it right off my paycheck every month…$15 a month starting in July. My pay stub verifies that I contributed the $90 to the United Way. Oh, one other bit of charity from me this year. An old buddy of mine was down on his luck. He lost his job and his house. I gave him $500 to help him out. I paid a lot of money in interest this year. I paid a total of $950 in personal credit card interest. I also paid $18,000 in interest on my $500,000 home mortgage that helped me buy my dream home. I also paid $2,000 in real estate taxes for my new house. A few other things I want to tell you about this year. Someone broke into my house and stole my kid’s brand new bicycle and my set of golf clubs. The total loss from theft was $900. I paid $125 in union dues this year. I had to pay $1,200 for new suits for my job. Roca Cola requires its managers to wear suits every day on the job. I spent a total of $1,300 to pay for gas to commute to my job this year. Oh, this is pretty cool. I’ve always wanted to be a firefighter. I spent $1,400 in tuition to go to the local firefighter’s school. I did this because someone told me that I can deduct the tuition as an itemized deduction, so the money would be coming back to me. That should be all the information you need right now. Please calculate my taxable income. You’re still doing this for free, right?

Shady Slim / Comprehensive Deductions Problem Read the following letter and help Shady Slim with his tax situation. Assume that gross income is $172,900 (which consists only of salary) and ignore AGI thresholds for purposes of this problem. December 31, 2020 To the friendly student tax preparer: I paid a lot of money in interest this year. I paid a total of $950 in personal credit card interest. I also paid $18,000 in interest on my S500,000 home mortgage that helped me buy my dream home. I also paid $2,000 in real estate taxes for my new house. A few other things I want to tell you about this year. Someone broke into my house and stole my kid's brand new bicycle and my set of golf clubs. The total loss from theft was $900. I paid $125 in union dues this year. I had to pay $1,200 for new suits for my job. Roca Cola requires ils managers to wear suits every day on the job. I spent a total of $1,300 to pay for gas to commute to my job this year. Hi, it's Shady Slim again. I just got back from my 55" birthday party, and I'm told that you need some more information from me in order to complete my tax return. I'm an open book! I'll tell you whatever I think you need to know. I had to move this year after getting my job at Roca Cola. I moved on February 3 of this year, and I worked my job at Roca Cola for the rest of the year. I still live in the same state, but I moved 500 miles away from my old house. I hired a moving company to move my stuff at a cost of $2,300, and I drove in my car. I got a hotel room along the way that cost us $65 (I love Super 8!) Oh, this is pretty cool. I've always wanted to be a firefighter. I spent $1,400 in tuition to go to the local firefighter's school. I did this because someone told me that I can deduct the tuition as an itemized doduction, so the money would be coming back to me. That should be all the information you need right now. Please calculate my taxable income. You're still doing this for free, right? Can you believe I'm still paying off my student loans, even after 15 years? I paid a total of $900 in interest on my old student loans this year. Since Roca Coca (my cmployer) never started a retirement plan, I decided I should probably start saving for my golden years. I contributed $3,000 to what the bank referred to as a regular IRA (or was it a REM?). Oh yeah, I also did a little investing this year, I bought a limited partnership interest in Duds, Ltd. For $10,000. I thought it was going to be a real winner, but this year they took a bath. My portion of the loss was $8,000. Well, at least I did not actually do any work for Duds, and I get the tax deduction - right? Remember when I told you about that guy that hit me with his car? I had a bunch of medical expenses that were not reimbursed to me by the lawsuit or by my insurance. I incurred a total of $20,000 O in medical expenses, and I was only reimbursed for $11.000. Good thing I can write off medical expenses, right? I contributed a lot of money to charity this year (and have receipt documentation for all contributions). I'm such a nice guy! I gave $1,000 in cash to the March of Dimes. I contributed some of my old furniture to the church. It was some good stuff. I contributed a red velvet couch and my old recliner. The furniture is considered vintage and is worth $5,000 today (the appraiser surprised me!), even though I only paid $1,000 for it back in the day. When I contributed the furniture, the pastor said he didn't like the fabric and was going to sell the furniture to pay for some more pews in the church. Oh well, some people just have no taste, right? Roca Cola had a charity drive for the United Way this year and I contributed S90. Turns out, I don't even miss it because Roca Cola takes it right off my paycheck every month...$15 a month starting in July. My pay stub verifies that I contributed the $90 to the United Way. Oh, one other bit of churity from me this year. An old buddy of mine was down on his luck. He lost his job and his house. I gave him $500 to help him out.

Answer 1

1 +2900 172.900 Lamolole Income Particulars $ Gross Income AGI Itemused deductions Medical expenses 18000 Mortgage interest Real estate tanes 2000 Charitable contributions (logoticoat 9.) 2090 22090 Tamable Income 150810 Tare Liobilety -12.962 +(247.(150810-84200) = $_28948 CSH Scanned with CamScanner

Department of the Treasury - Internal Revenue Service (99) 2019 OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space. Filing Status Single Married filing jointly Married filing separately (MFS) Head of household (HOH) Qualifying widower) (OW) Check only If you checked the MFS box, enter the name of spouse. If you checked the HOH or QW box, enter the child's name if the qualifying person is one box a child but not your dependent. Your first name and middle initial Last name Your social security number Shady Slim 1 2 3 4 $ 6 7 8 9 If joint return, spouse's first name and middle initial Last name Spouse's social security number Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign 19010 N.W. 135th street Check here if you, or your spouse if filing jointly, want $3 to go to this fund. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Checking a box below will not change your Miami, FL 33054 tax or refund. You Spouse Foreign country name Foreign province/state/county Foreign postal code If more than four dependents, see instructions and here ► Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You Were born before January 2, 1955 Are blind Spouse: Was born before January 2, 1955 Is blind Dependents (see instructions): (2) Social security number (3) Relationship to you (4) if qualities for (see instructions: (1) First name Last name Child tax credit Credit for other dependents Shady Slim Jr. Son 1 1 172900 2a 2b За 4a 3b 4b 4d Wages, salaries, tips, etc. Attach Form(s) W-2 Tax-exempt interest. 2a b Taxable Attach Sch. B if required Qualified dividends. 3a b Ordinary dividends. Attach Sch. B if required IRA distributions. 4a b Taxable amount Pensions and annuities 4c d Taxable amount Social security benefits ts. 5a b Taxable amount Capital gain or loss). Attach Schedule D if required. If not required, check here Other income from Schedule 1, line 9 Add lines 1, 2, 3, 46, 4d, 55, 6, and 7a. This is your total income Adjustments to income from Schedule 1, line 22 5a Standard Deduction for • Single or Married filing separately. $12.200 Married filing jointly or Qualifying widower). $24.400 • Head of household S1R350 5b 6 6 7a 7a b 7b 172900 8а 8a

Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You: Were born before January 2, 1955 Are blind Spouse: Was born before January 2, 1955 Is blind Dependents (see instructions): (2) Social security number (3) Relationship to you (4) if qualities for (see instructions: (1) First name Last name Child tax credit Credit for other dependents Shady Slim Jr. Son 1 172900 2b 3b 4b 4d 5b 6 7a 1 Wages, salaries, tips, etc. Attach Form(s) W-2. 2a Tax-exempt interest 2a b Taxable interest. Attach Sch. B if required За Qualified dividends. 3a b Ordinary dividends. Attach Sch. B if required Standard Deduction for 4a IRA distributions. 4a b Taxable amount Single or Married с Pensions and annuities 4c d Taxable amount filing separately, $12.200 5a Social security benefits 5a b Taxable amount • Married filing 6 jointly or Qualifying Capital gain or loss). Attach Schedule Dif required. If not required, check here widower). 7a Other income from Schedule 1, line 9 $24.400 • Head of b Add lines 1, 26, 35, 46, 4d, Sb, 6, and 7a. This is your total income household 8а $18,350 Adjustments to income from Schedule 1, line 22 • If you checked b Subtract line 8a from line 7b. This is your adjusted gross income any box under Standard Standard deduction or itemized deductions (from Schedule A) 9 22090 Deduction 10 10 see instructions Qualified business income deduction. Attach Form 8995 or Form 8995-A 11a Add lines 9 and 10. b Taxable income. Subtract line 11a from line 8b. If zero or less, enter-O- For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B 172900 7b 8а 8b 172900 11a 11b 22090 150810 Form 1040 (2019)

Attachment 9000 2 3 12968 4 0 SCHEDULE A Ttemized Deductions OMB NO. 1545-0074 (Form 1040 or 1040-SR) Go to www.irs.gov/Schedule for instructions and the latest information. (Rev. January 2020) Attach to Form 1040 or 1040-SR. 2019 Department of the Treasury Internal Revenue Service (90) Caution: If you are claiming a net qualified disaster loss on Form 4684, see the instructions for line 16. Sequence No. 07 Name(s) shown on Form 1040 or 1040-SR Your social security number Shady Slim 123456789 Medical Caution: Do not include expenses reimbursed or paid by others. and 1 Medical and dental expenses (see instructions) Dental 2 Enter amount from Form 1040 or 1040-SR, line 8b 172900 Expenses 3 Multiply line 2 by 7.5% (0.075). ... 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter-O- Taxes You 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 . 5a b State and local real estate taxes (see instructions) 5b 2000 c State and local personal property taxes 5c dAdd lines 5a through 5c. 2000 e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately) 6 Other taxes. List type and amount 5d 5e 6 7 2000 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. See instructions if limited b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8a 18000 8b c Points not reported to you on Form 1098. See instructions for special

10 11 made a gift and 12 8b c Points not reported to you on Form 1098. See instructions for special rules 8c d Mortgage insurance premiums (see instructions). 8d e Add lines 8a through 8d... 8e 18000 9 Investment interest. Attach Form 4952 if required. See instructions. 9 10 Add lines 8e and 9 18000 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, see Charity instructions.. 2090 Caution: If you 12 Other than by cash or check. If you made any gift of $250 or more, got a benefit for it, see instructions. You must attach Form 8283 if over $500. See instructions. 13 Carryover from prior year 13 14 Add lines 11 through 13. Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified Theft Losses disaster losses). Attach Form 4684 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 or 1040-SR, line 9 Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction, check this box For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Cat. No. 17145C Schedule A (Form 1040 or 1040-SR) 2019 C::::::: 14 2090 15 16 22090 17