Your assignment is to complete and turn in Ms. Amanda Shires’ 2020 Form 1040 along with all required forms and schedules. For purposes of this assignment, you do not need to attach any Forms W-2, 1098, 1099, or K-1.
You may work individually or in groups of two or three. You must notify your professor ahead of the due date if you plan to work as part of a group.
For each instruction in this document that is not followed, you will receive a 10-percentage point deduction.
Return, Forms & Schedules (7.5 points – accuracy of positions)
• You may use any of the forms, instructions, and materials contained on www.irs.gov. You may also use your textbook for guidance, but keep in mind that you are completing a 2020 return, so it must be prepared using the law in place in 2020 (the book teaches the 2021 law).
• You must complete this project without using any online tax preparation software or the aid of any professionals. Each person/group must prepare their own tax return rather than simply copying portions from another source (e.g., another person’s/group’s work).
• You must handwrite the tax return. I recommend that you use a pencil.
• You must sign your income tax return as a paid preparer. By signing the tax return, for purposes of this class, you are promising that you have complied with the instructions for this project and have not violated the GGC Honor Code in preparing your project. If you work as a group, then each member of the group must sign the return.
• You must write your name(s) at the top of the front page of the tax return.
• If you believe there is information missing in the client information, you may make reasonable assumptions and fill in the missing information as you feel necessary. Be sure, however, to note your assumptions.
Emily Haines – 2020 Federal Income Tax Return
Emily Haines lives at 86 Pike Place, Seattle, Washington, 98101. Emily tried to make life work in Lake Saranac, NY, for the past 20 years, but it had become too difficult to find a job flexible enough to accommodate her family obligations. As such, she found a job in Seattle, Washington in 2020 to get a fresh start. Emily is a single mother with three kids—James, Joshua, and Joules.
Emily’s husband, Jarrett, passed away in 2018, which is the main reason she experienced a change in circumstances. She has not remarried. While she and her husband always filed a joint income tax return, she is now confused about which filing status is most beneficial to her. She does know, however, that she would like to receive any tax refund via check. She has informed you that she has no interests in foreign bank accounts, foreign trusts, or virtual currencies. Further, she would like to contribute to the Presidential Election Campaign.
Emily’s family information is listed in the below table:
Name Age SSN
Emily 46 123-45-5678
James 23 234-56-7890
Joshua 16 345-67-8901
Joules 11 456-78-9012
Emily’s oldest child, James, is single and is completing his graduate school work at the University of Washington (EIN 36-2167817). The University is located at 975 University Avenue, Seattle, Washington 98112. James finished his undergraduate work at New York University in 2018, and 2020 was his fifth year as a full-time student pursuing higher education. James works 10 hours per week at the University of Washington to help support himself. He earned $3,500 of gross income in 2020 and prepared his own taxes.
Emily paid for the majority of James’ support, providing $14,000 for various expenses (tuition, books, clothing, rent, food, medical bills). James’ main expenses were for textbooks he bought on Amazon ($800) and tuition paid to the college ($6,500). James received Form 1098-T from the University of Washington for the year.
Emily’s other two children lived with her throughout the year. Joules, her youngest, is in daycare most days after school, which allows Emily to work. Joule’s care cost $4,500 for the year. The daycare, Grow Up & Blow Away, LLC (EIN 72-6781234), is located at 703 Space Needle Drive, Seattle, Washington 98108.
Emily had the following Forms W-2 from 2020:
Company Gross Income Federal Tax Withholding State Tax Withholding
Old World Underground, Inc. $29,500 $750 $315
Dreams So Real, LLC $9,085 $110 $42
Pagans in Vegas, Inc. $12,300 $290 $120
Each company properly withheld payroll taxes. Further, Emily received both Economic Impact Payments in 2020, but she is not eligible for the Recovery Rebate Credit. Also, her entire family qualified for minimum essential health insurance coverage for the full year.
Back in 2019, Emily began her own record producing business, which caters to musicians and recording artists throughout the Pacific Northwest. This business has allowed her to earn some of the extra money she needs to support James. Emily’s business is on the cash method of accounting, and she does not have any employees or independent contractors. The business does not own any equipment. Emily’s business earned $17,500 of gross receipts for 2020. The business spent $10,200 to rent space in a studio between May and December, it spent $1,080 on advertising materials, and it spent $400 on professional services.
In addition to her earned income, Emily received the following income during the year:
• Interest income – First Seattle Bank $1,010
• Interest income – Synthetica, Inc. bond $2,500
• Interest income – City of Tacoma Municipal Bond $190
• Washington state income tax refund $400
• Cash gift from her friend, Colin Meloy $3,100
The state tax refund was from taxes Emily paid in 2019. Emily claimed her itemized deductions in 2019 because they exceeded her standard deduction by $3,200. Her state income taxes made up part of her itemized deductions in that year.
Emily also received $145,000 of life insurance proceeds from Stratton Oakmont, Inc., when her grandfather passed away during the year.
Emily made the following cash contributions to qualified charities during the year:
• Contribution to New York University $1,500
• Contribution to the University of Washington $3,000
• Contribution to the Emmanuel Anglican Church $4,500
• Contribution to the American Cancer Society $4,000
• Contribution to her friend, Benjamin Gibbard $500
Here are Emily’s remaining expenses for the year:
• Real property taxes (main residence) $2,000
• Vehicle registration fee (based upon age of car) $220
• Main residence mortgage interest (from Form 1098) $3,200
• Dentist visit (unreimbursed) $100
• Pharmacy prescriptions (unreimbursed) $115