Problem 2 Answers

8/3/2019 Problem 2 Answers

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Training Exercises

Problem 2

Wilfred (606-01-0101) and Angela (606-02-0202) Newman are married and file a joint return.

Wilfred and Angela present you with the below documents. In addition, you find out the following

information during the client interview:

• Both Wilfred and Angela are 67 years old.

• Wilfred and Angela support their 12-year old granddaughter, Maggie Stein (606-03-0303), who liveswith them since December 2007.

• Wilfred and Angela do not wish to contribute $3 to the Presidential Election Campaign Fund.

• Angela continues to work as a part-time teacher even after reaching the age of 65.

• Angela has teacher expenses of $400 and the school reimbursed $200.

• Wilfred and Angela paid their neighbor, Cathy Homestead (606-04-0404) $1,400 during 2011 to watchMaggie while they went to the movies or to the opera.

• Angela tells you that she received interest from investing in CA state bonds, as indicated on her Form

1099-INT from Fifth Third Bank.

• Wilfred and Angela paid $1,200 in real estate taxes during 2011.

•

Wilfred, Angela and Maggie lived in New York, NY for all 12 months of 2011.

Please use Site Identification Number S1501-9999.

you

Federal study questions:

1. Does Maggie qualify to be a dependent qualifying child or dependent qualifying relative?

2. Do you have to file Schedule D? Why or why not?

3. What type of income is represented in each 1099-R you see?4. What is the max amount of Social Security that can be taxable? Can you check your answer?5. What is Wilfred and Angela’s standard deduction? How do you calculate it?

6. Does the $1,400 in babysitting expenses qualify for the Child & Dependent Care Credit? Whyor why not?

7. Do they qualify for the federal EIC? (Use the eligibility chart from Problem 1a.) Why or whynot? If yes, what worksheet should you use? Do you need to complete Schedule EIC?

8. What is the amount of Wilfred and Angela’s Additional Child Tax Credit? Explain your answer.

NYS study questions:

1. How does NYS treat Social Security Benefits? How is that reflected in the NY adjustments

section? What about interest on CA state bonds?2. Do the Newmans qualify for the pension & annuity income exclusion? For what amount?3. How does age affect the NY State standard deduction?

4. What are the only two non-refundable credits on the NY State return? Are the Newman’seligible?

BaruchVITA January Training Material

Copyright 2012 BaruchVITA. All rights reserved,



Training Exercises

Problem 2

a Employee’s social security number 1 Wages, tips, other compensation 2 Federal income tax withheld

606-02-0202 19,000.00 1,900.00b Employer identification number (EIN) 3 Social security wages 4 Social security tax withheld

13-1234567 19,000.00 1,178.00

c Employer’s name, address, and ZIP code 5 Medicare wages and tips 6 Medicare tax withheld

The New York School of LifeFifth Avenue and 42nd StreetNew York, NY 10018

19,000.00 275.507 Social security tips 8 Allocated tips

9 Advance EIC payment 10 Dependent care benefits

d Control number 11 Nonqualified plans 12a

e/f Employee’s name, address, and ZIP code 13Statutoryemployee

Retirementplan

Third-partysick pay

12b

Angela Newman1001 Main Street, Apt 6

New York, NY 10010

14 Other 12c

PPL 14.00 12d

15 State Employer’s state ID 16 State wages 17 State income tax 18 Local wages 19 Local income tax 20 Locality

NY 13-1234567 19,000.00 950.00 19,000.00 570.00 NYC

FormW-2:Wage and Tax Statement 2011Copy 2 To Be Filed With Employee’s State, City

or Local Income Tax Return

Department of the Treasury – Internal Revenue Service OMB No. 1545-0008

VOID (if checked) CORRECTED (if checked) PAYER’S name, street address, ZIP code 1 Gross distribution

2011Form

1099–R

Distributions From Pensions,

Annuities, Retirement or Profit-Sharing Plans, IRAs,Insurance Contracts, etc.

NY Dept. of Aging655 North Central Ave, Suite 1400Glendale, CA 91203-1400

26,000.002a Taxable distribution

22,500.00

2b Taxable amount not

determined Total distribution

Copy B For Recipient

Report this incomeon your federal taxreturn. If this formshows federalincome tax withheldin box 4, attach thiscopy to your return.

This information isbeing furnished to

the Internal RevenueService

PAYER’S federalidentification number

RECIPIENT’Sidentification number

13-7000123 606-01-0101 3 Capital gain (incl. in box 2a) 4 Federal income tax withheld

RECIPIENT’S name, address, ZIP code 2,250.00

Wilfred Newman1001 Main Street Apt 6New York, NY 10010

5 Employee contributions/Designated Roth contributionsor insurance premiums

6 Net unrealized appreciation inemployer’s securities

1st year of design. Roth contrib. 7 Distributioncode(s)

IRA/SEP/SIMPLE

8 Other

7 $ %

9a Your percentage of total distribution 10 State tax withheld 11 State/Payer’s state no. 12 State distribution

% NY / 13-7000123 22,500.009b Total employee contributions 13 Local tax withheld 14 Name of locality 15 Local distribution

NYC 22,500.00Department of the Treasury – Internal Revenue Center (keep for your records) OMB No. 1545-0119





Training Exercises

Problem 2


2011Form

1099–R

Distributions From Pensions,Annuities, Retirement or Profit-Sharing Plans, IRAs,

Insurance Contracts, etc.

Washington Mutual Inc

1000 Occidental Ave SSeattle, WA 98134


12,000.00


determinedTotal distribution

Copy B For

Recipient


This information isbeing furnished tothe Internal RevenueService




RECIPIENT’S name, address, ZIP code 0.00

Angela Newman1001 Main Street Apt 6New York, NY 10010




IRA/SEP/SIMPLE

8 Other

7 $ %

9a Your percentage of total distribution 10 State tax withheld 11 State/Payer’s state no. 12 State distribution% NY / 21-7075555 12,000.00

9b Total employee contributions 13 Local tax withheld 14 Name of locality 15 Local distribution



2011Form

1099–R

Distributions From Pensions,Annuities, Retirement or Profit-Sharing Plans, IRAs,Insurance Contracts, etc.

US Small Business Administration500 P St NWWashington, DC 20001


8,000.00


determined Total distributionCopy B For Recipient


This information isbeing furnished tothe Internal RevenueService




RECIPIENT’S name, address, ZIP code 800.00





IRA/SEP/SIMPLE

8 Other

7 $ %

9a Your percentage of total distribution 10 State tax withheld 11 State/Payer’s state no. 12 State distribution

% NY / 15-6062222 12,000.009b Total employee contributions 13 Local tax withheld 14 Name of locality 15 Local distribution






Training Exercises

Problem 2

CORRECTED (if checked)

Form 1099–INT: Interest Income 2011 Copy B: For Recipient

PAYER’S name, street address, ZIP code RECIPIENT’S name, street address, ZIP code

Fifth Third Bank38 Fountain Square PlazaCincinnati, OH 45263-0001


PAYER’S federal identification number RECIPIENT’S identification number

16-8765432 606-02-02021 Interest income 2 Early withdrawal penalty 3 Interest on U.S. Saving Bonds and Treasury obligations

1725.00 30.004 Federal income tax withheld 5 Investment expenses 6 Foreign tax paid 7 Foreign country

200.00Payer’s RTN (optional) Account number 8 Tax exempt interest 9 Specified private activity bond interest

5681109-9 452.00Department of the Treasury – Internal Revenue Center OMB No. 1545-0112 (keep for your records)

Form 1099-DIV: Dividends and Distributions 2011 Copy B: For Recipient

PAYER’S name, street address, ZIP code RECIPIENT’S name, street address, ZIP code

Safe Investments Inc.9 Lincoln Center, 21

stFloor

New York, 10000


PAYER’S federal identification number RECIPIENT’S identification number

13-345777 606-02-02021a Total ordinary dividends 1b Qualified dividends 3 Nondividend distributions 4 Federal income tax withheld

$29.352a Total capital gain distribution 2b Unrecaptured Sec. 1250 gain 2c Section 1202 gain 2d Collectibles (28%) gain

$16.20

5 Investment expenses 6 Foreign tax paid 7 Foreign country This is important tax information and isbeing furnished to the IRS. If you arerequired to file a return, a negligencepenalty or other sanction may beimposed on you if this income istaxable and the IRS determines that ithas not been reported.

8 Cash liquidation distributions 9 Noncash liquidation distributions Account number

AB-7003009Department of the Treasury – IRS OMB No. 1545-0110

Meals on Wheels NY355 Lexington Ave # 3New York, NY 10017

2011 RECEIPT OF DONATION – BRING THIS TO YOUR TAX PREPARER

This receipt certifies that Wilfred Newman (SSN 606-01-0101) has donated a 1994 BuickRegal appraised at $2,000. This car will be used in support of our goal to deliver meals andfree smiles to NYC’s homebound elderly.

JOHN GRANT

Fundraising Chair Meals on Wheels NY





Training Exercises

Problem 2

FORM SSA-1099 – SOCIAL SECURITY BENEFIT STATEMENT

2011 • PART OF YOUR SOCIAL SECURITY BENEFITS SHOWN IN BOX 5 MAY BE TAXABLE INCOME• SEE THE REVERSE FOR MORE INFORMATION

Box 1. Name Box 2. Beneficiary’s Social Security Number

Wilfred Newman 606-01-0101

Box 3. Benefits Paid Box 4. Benefits Repaid to SSA Box 5. Net Benefits (Box 3 minus Box4)

$10,800.00 NONE $10,800.00

DESCRIPTION OF AMOUNT IN BOX 3 DESCRIPTION OF AMOUNT IN BOX 4

Paid by check or direct deposit $12,200.00 NONE

Medicare premiums deducted fromyour benefit

$1,400.00 Box 6. Voluntary Federal Income Tax Withheld

$500.00

Total additions $10,800.00 Box 7. Address

Wilfred Newman1001 Main Street Apt 6

New York, NY 10010

Box 8. Claim Number (Use this number if you need to contactSSA)

707-01-0101

Form SSA-1099 DO NOT RETURN THIS FORM TO SSA OR IRS



11600

x

11600230013900

===$1150

======$11600



Training Exercises

Problem 2

F o r m1040

Department of the Treasury—Internal Revenue Service

OMB No. 1545-0074

(99)

IRS Use Only—Do not write or staple in this space.U.S. Individual Income Tax Return 2011For the year Jan. 1–Dec. 31, 2011, or other tax year beginning , 2011, ending , 20 See separate instructions.

Your first name and initial Last name Your social security number

If a joint return, spouse’s first name and initial Last name Spouse’s social security number

Make sure the SSN(s) above

and on line 6c are correct.

Home address (number and street). If you have a P.O. box, see instructions. Apt. no.

City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions).

Foreign country name Foreign province/county Foreign postal code

Presidential Election Campaign

Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checkinga box below will not change your tax orrefund. You Spouse

Filing Status

Check only one

box.

1 Single

2 Married filing jointly (even if only one had income)

3 Married filing separately. Enter spouse’s SSN above

and full name here.

4 Head of household (with qualifying person). (See instructions.) If

the qualifying person is a child but not your dependent, enter this

child’s name here.

5 Qualifying widow(er) with dependent child

Exemptions 6a Yourself. If someone can claim you as a dependent, do not check box 6a . . . . .

b Spouse . . . . . . . . . . . . . . . . . . . . . . . .

} Boxes checkedon 6a and 6b

c Dependents:

(1) First name Last name

(2) Dependent’s

social security number

(3) Dependent’s

relationship to you

(4) if child under age 17qualifying for child tax credit

(see instructions)

If more than four

dependents, see

instructions and

check here

d Total number of exemptions claimed . . . . . . . . . . . . . . . . .

No. of childrenon 6c who:• lived with you• did not live with

you due to divorceor separation (see instructions)

Dependents on 6cnot entered above

Add numbers onlines above

Income

Attach Form(s)

W-2 here. Also

attach Forms

W-2G and

1099-R if tax

was withheld.

If you did not

get a W-2,

see instructions.

Enclose, but do

not attach, any

payment. Also,

please use

Form 1040-V.

7 Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . 7

8a Taxable interest. Attach Schedule B if required . . . . . . . . . . . . 8a

b Tax-exempt interest. Do not include on line 8a . . . 8b

9a Ordinary dividends. Attach Schedule B if required . . . . . . . . . . . 9a

b Qualified dividends . . . . . . . . . . . 9b

10 Taxable refunds, credits, or offsets of state and local income taxes . . . . . . 10

11 Alimony received . . . . . . . . . . . . . . . . . . . . . 11

12 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . . 1213 Capital gain or (loss). Attach Schedule D if required. If not required, check here 13

14 Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 14

15a IRA distributions . 15a b Taxable amount . . . 15b

16a Pensions and annuities 16a b Taxable amount . . . 16b

17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17

18 Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . 18

19 Unemployment compensation . . . . . . . . . . . . . . . . . 19

20a Social security benefits 20a b Taxable amount . . . 20b

21 Other income. List type and amount 21

22 Combine the amounts in the far right column for lines 7 through 21. This is your total income 22

AdjustedGrossIncome

23 Educator expenses . . . . . . . . . . 23

24 Certain business expenses of reservists, performing artists, and

fee-basis government officials. Attach Form 2106 or 2106-EZ 24

25 Health savings account deduction. Attach Form 8889 . 25

26 Moving expenses. Attach Form 3903 . . . . . . 26

27 Deductible part of self-employment tax. Attach Schedule SE . 27

28 Self-employed SEP, SIMPLE, and qualified plans . . 28

29 Self-employed health insurance deduction . . . . 29

30 Penalty on early withdrawal of savings . . . . . . 30

31a Alimony paid b Recipient’s SSN 31a

32 IRA deduction . . . . . . . . . . . . . 32

33 Student loan interest deduction . . . . . . . . 33

34 Tuition and fees. Attach Form 8917 . . . . . . . 34

35 Domestic production activities deduction. Attach Form 8903 35

36 Add lines 23 through 35 . . . . . . . . . . . . . . . . . . . 36

37 Subtract line 36 from line 22. This is your adjusted gross income . . . . . 37

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2011)



Wilfred Collins 606 01 0101

606 02 0202Angela Collins

1001 Main Street 6

New York, NY 10010

x

x

x

2

Maggie Stein 606 03 0303 grandchild x

1

3

19000

1725452

29

x 16

1200041000

12000

30500

10800 9180

72450200

30

230

72220



Training Exercises

Problem 2

Form 1040 (2011) Page 2

Tax and

Credits

38 Amount from line 37 (adjusted gross income) . . . . . . . . . . . . . . 38

39a Check

if:{ You were born before January 2, 1947, Blind.

Spouse was born before January 2, 1947, Blind.}Total boxes

checked 39a

b If your spouse itemizes on a separate return or you were a dual-status alien, check here 39bStandardDeductionfor—

• People whocheck anybox on line39a or 39b orwho can beclaimed as adependent,seeinstructions.

• All others:

Single orMarried filingseparately,$5,800

Married filing jointly orQualifyingwidow(er),$11,600

Head of

household,$8,500

40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) . . 40

41 Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . . . 41

42 Exemptions. Multiply $3,700 by the number on line 6d . . . . . . . . . . . . 42

43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . 43

44 Tax (see instructions). Check if any from: a Form(s) 8814 b Form 4972 c 962 election 44

45 Alternative minimum tax (see instructions). Attach Form 6251 . . . . . . . . . 45

46 Add lines 44 and 45 . . . . . . . . . . . . . . . . . . . . . 46

47 Foreign tax credit. Attach Form 1116 if required . . . . 47

48 Credit for child and dependent care expenses. Attach Form 2441 48

49 Education credits from Form 8863, line 23 . . . . . 49

50 Retirement savings contributions credit. Attach Form 8880 50

51 Child tax credit (see instructions) . . . . . . . . 51

52 Residential energy credi ts. Attach Form 5695 . . . . 52

53 Other credits from Form: a 3800 b 8801 c 53

54 Add lines 47 through 53. These are your total credits . . . . . . . . . . . . 54

55 Subtract line 54 from line 46. If line 54 is more than line 46, enter -0- . . . . . . 55

Other

Taxes

56 Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . 56

57 Unreported social security and Medicare tax from Form: a 4137 b 8919 . . 57

58 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required . . 58

59a 59a

b 59b

Household employment taxes from Schedule H . . . . . . . . . . . . . .

First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . .

60 Other taxes. Enter code(s) from instructions 60

61 Add lines 55 through 60. This is your total tax . . . . . . . . . . . . . 61

Payments 62 Federal income tax withheld from Forms W-2 and 1099 . . 62

63 2011 estimated tax payments and amount applied from 2010 return 63If you have aqualifyingchild, attachSchedule EIC.

64a Earned income credit (EIC) . . . . . . . . . . 64a

b Nontaxable combat pay election 64b

65 Additional chi ld tax credit. Attach Form 8812 . . . . . . 65

66 American opportunity credit from Form 8863, line 14 . . . 66

67 First-time homebuyer credit from Form 5405, line 10 . . . 67

68 Amount paid with request for extension to file . . . . . 68

69 Excess social security and tier 1 RRTA tax withheld . . . . 69

70 Credit for federal tax on fuels. Attach Form 4136 . . . . 70

71 Credits from Form: a 2439 b 8839 c 8801 d 8885 71

72 Add lines 62, 63, 64a, and 65 through 71. These are your total payments . . . . . 72

Refund

Direct deposit?Seeinstructions.

73 If line 72 is more than line 61, subtract line 61 from line 72. This is the amount you overpaid 73

74a Amount of line 73 you want refunded to you. If Form 8888 is attached, check here . 74a

b Routing number c Type: Checking Savings

d Account number

75 Amount of line 73 you want applied to your 2012 estimated tax 75

Amount

You Owe76 Amount you owe. Subtract line 72 from line 61. For details on how to pay, see instructions 76

77 Estimated tax penalty (see instructions) . . . . . . . 77

Third Party

Designee

Do you want to allow another person to discuss this return with the IRS (see instructions)? Yes. Complete below. No

Designee’sname

Phoneno.

Personal identificationnumber (PIN)

SignHere

Joint return? Seeinstructions.Keep a copy foryour records.

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief,they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Your signature Date Your occupation Daytime phone number

Spouse’s signature. If a joint return, both must sign.

Date Spouse’s occupation If the IRS sent you an Identity Protection

PIN, enter ithere (see inst.)

Paid

Preparer

Use Only

Print/Type preparer’s name Preparer’s signature DateCheck ifself-employed

PTIN

Firm’s name

Firm’s address

Firm's EIN

Phone no.

Form 1040 (2011)



72220x

x 2

13900

5832011100472206234

6234

1000

10005234

52345650

0

5650

416416

x

S1501-9999



Training Exercises

Problem 2



Fifth Third Bank 1725

1725

1725

x

x

x



Training Exercises

Problem 2



10800

5400

63270

452

69122

230

x 68892

32000

x 36892

12000

24892

12000

6000

540021158265589180

9180



Training Exercises

Problem 2



1 1000

72220

110000

x

0

x 1000



Training Exercises

Problem 2



6234

0

x6234

x

1000



Training Exercises

Problem 2





Training Exercises

Problem 2



Wilfred Newman 01/01/1944 606-01-0101

Angela Newman 01/02/1944 606-02-0202

1001 Main Street 6

New York NY 10010

NYC

Manhattan

369

x

x

x

x

365

12

12

19000

172529

16

1200030500

9180

72450230

72220

Edu Exp $20; Penalty $30



Training Exercises

Problem 2



606-01-0101

72220

452

72672

305009180

12000

5168020992

x 15000

59921

4992



Training Exercises

Problem 2



Wilfred & Angela Newman 606-01-0101

4992199

199

199

145

145

145

145

145

0

0

344



Training Exercises

Problem 2



606-01-0101

344

330

125

950

570

1975

1631

1631

x

S1501-9999



Training Exercises

Problem 2



Wilfred Newman 606-01-0101

Angela Newman 606-02-0202

x

x

x

1

1

Maggie Stein 606-03-0303 1999



Training Exercises

Problem 2



1000

1000

1

1000

1

1000

330

1

100

330



Training Exercises

Problem 2


Wilfred Newman

Anegla Newman

606-01-0101

606-02-0202

The New York School of LifeFifth Avenue and 42nd Street New York, NY 10018

13-1234567

x

19000 00

14 00 PPL NYC

NY 19000 00

950 00

19000 00

570 00

Problem 2 Answers

Documents

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