Question

• Alvin and Kelly are married and want to file a joint return. • Alvin and Kelly have a seven-year-old son named Connor. Connor lived with his parents the entire year. • Alvin, Kelly, and Connor have valid Social Security numbers that allow them to work and were issued by the due date of the return. • Alvin and Kelly are not qualifying children of any other person. • Alvin was deployed to Syria and entered a combat zone on April 20, 2018 and returned to the U.S on March 3, 2019. • Alvin and Kelly elect NOT to include combat pay in the calculation of their earned income credit. • Alvin has rental property, which he placed into service in 2016 • Rental property: – Alvin is an active participant. – Single family residence, 3571 Oak Street, Your City, Your State. – Purchased property: 06/03/2009. – Rented: 1/1/2018 - 12/31/2018. – Annual rental income: $12,000. – Insurance: $1,000. – Management fees: $1,200. – Alvin paid $450 to replace a broken doorbell, shower head, leaky faucet and unclog drains. He learned how to complete these repairs after watching Do-ItYourself 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: $3,840. – Depreciation: $2,200. – Alvin did not make any payments that would require him to file Form 1099. 104 Military Scenarios • Alvin and Kelly did not itemize last year and do not have enough deductions to itemize this year. • Each member of the Blackburn family had health insurance for the entire year through a TRICARE plan that meets the Affordable Care Act requirement for minimum essential coverage.

1. Alvin's rental income is reported on which schedule?

A. Schedule C, Profit or Loss from Business or C-EZ, Net Profit from Business B. Schedule D, Capital Gains and Losses C. Schedule E, Supplemental Income and Loss D. Schedule F, Profit or Loss From Farming 2. What is the amount of rental expenses Alvin and Kelly can claim on their joint return? $________. 3. Combat Pay is included in box 1 of the W-2 True False

Answer 1

1) Alvin's rental income is reported on, the answer is "C Schedule E, Supplemental Income and Loss" Form 1040.

2) The amount of rental expenses Alvin and Kelly can claim on their joint return are $10190.

The calculation is given below:-

Insurance: $1,000. – will be considered as an expense in schedule A form 1040

Management fees: $1,200. – will be considered as an expense in schedule A form 1040

Alvin paid $450 to replace a broken doorbell, shower head, leaky faucet and unclog drains. – Will considered as an expense in schedule A Form 1040

$1,000, which is equivalent to professional electrician and plumber labor cost- Will not be considered as an expense in Schedule A form 1040.

Real estate property tax: $1,500. – Will considered as an expense in schedule A Form 1040

Mortgage Interest: $3,840. – Will considered as an expense in schedule A Form 1040

Depreciation: $2,200. – Will considered as an expense in schedule A Form 1040

3) Combat Pay is included in box 1 of the W-2, the answer is "False".