Len and Christy Vole, ages 42 and 39 respectively, are married and file jointly
ID: 2454332 • Letter: L
Question
Len and Christy Vole, ages 42 and 39 respectively, are married and file jointly in 2014. Len is a contractor operating as a sole proprietorship (EIN 11-1111111). Christy is employed, earning $24,000 as a part-time paralegal. They have two dependent children, Jill age 8 and Lee, age 5. In 2014, they recieved $4,550 from Good Bank in taxable interest income. Their allowable itemized deductions inculde state income tax $3,700; home mortage interst $6,000; and charity $5,000. Federal income tax withholding was $7,500 and estomated tax payments were $13,000. The Voles also incurred $7,000 of qualifying child care expenses to enable them to work ($3,500 for each child). It was paid to HiTop Daycare, 327 Fowler St., Indianapolis, IN 46802 (EIN 22-2222222).
Len earns $95,000 in profit in a sole proprietorship. He incurred the following expenses that qualify for the general business credit: $6,000 for disabled access. No adjustments are required to this credit and there are no carrbacks or carryforwards.
Social Security numbers are: Len, 111-11-1111; Christy, 222-22-2222; Jill, 333-33-3333; Lee, 444-44-4444.
Complete the Voles' Form 1040 for 2014, along with supporting Schedules A,B,C and SE, Form 2441 (child and dependent care credit), Form 3800 (general business credit), Form 8826 (disabled access credit), and Form 5884 (work opportunity credit). Show detail of the child tax credit computation (with any phaseout) at the bottom of Form 1040, page 2.
Form 1040: https://www.irs.gov/pub/irs-pdf/f1040.pdf
Schedule A: https://www.irs.gov/pub/irs-pdf/f1040sa.pdf
Schedule B: https://www.irs.gov/pub/irs-prior/f1040sb--2014.pdf
Schedule C: https://www.irs.gov/pub/irs-prior/f1040sc--2014.pdf
Schedule SE: https://www.irs.gov/pub/irs-prior/f1040sse--2014.pdf
Form 8826: https://www.irs.gov/pub/irs-prior/f8826--2013.pdf
Form 3800: https://www.irs.gov/pub/irs-prior/f3800--2014.pdf
Form 5884: https://www.irs.gov/pub/irs-prior/f5884--2014.pdf
Form 2441: https://www.irs.gov/pub/irs-prior/f2441--2014.pdf
Explanation / Answer
Form 1040
First Name : Len Last name : Vole SSN: 111-11-1111
First Name: Christy Last name : Vole SSN: 222-22-2222
Filling Status 2) Married Jointly
___________________________________________________________________________________
Exemption 6) c Dependents:
First name Last name SSN RElationship Under 17 age child
Jill Len 333-33-3333 Daughter Yes, aged 8
Lee Len 444-44-4444 Daughter Yes, aged 5
6) d Total number of dependants claimed is Two
_________________________________________________________________________________________
Incomes:
22) Total Income = $127,550
Less
Expenditure
27)Deductible part of self-employment tax. $11,668./2 = $5,834
38)Adjested Gross income = $121,716
40) Itemized deductions =$9,700
41) 40line -38 line($121,716 -$9,700) =$112,016
42)Exemptions. If line 38 is $152,525 or less,
multiply $3,950 by the number on line 6d =$7,900
43) Taxable Income 41 line - 42 line =$104,116
__________________________________________________________________________________
supporting Forms 2441 Calculation:
Persons or Organizations Who Provided the Care
Part 1
Care Provided Name: HiTop Daycare Address: 327 Fowler St., Indianapolis, IN 46802:
Identifying number: 22-2222222 Amount Paid : $7,000
part b
Credit for Child and Dependent Care Expenses
First Name Last Name SSN Qualified expenses
Jill Len 333-33-3333 $3,500
Lee Len 444-44-4444 $3,500
3) Qualifying amount for two persons $3,000 per person * 2=$6,000
4) Earned income. =$95,000
5) Spouse Earned income. =$28,000
6) Smallest of 3,4,5 =$6,000
7)Enter the amount from Form 1040, line 38; =$121,716
8) Enter on line 8 the
decimal amount of line 7(0.20* $121,716) =$24,343 (0.20 for over than $43,000 to no limit)
_____________________________________________________________
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