Assignment Task: Read each scenario and complete what is requested:
Scenario 1: Meet John White Simmons, a dedicated VA Hospital employee. As a single taxpayer, John's financial picture implies a W2 income of $64,830, with $7,110 withheld. Additionally, he has incurred expenses such as $3,350 in mortgage interest, $4,100 in medical expenses and $955 in state taxes.
His task is to guide John through the tax preparation process, completing Form 1040 and Schedule A based on the information provided.
Follow these steps:
1. Form 1040:
o Enter income, withholding, and calculate his adjusted gross income (AGI).
o Determine John's taxable income after considering any eligible deductions or credits.
o Use the appropriate tax tables to calculate Juan's federal tax liability.
o Consider the applicable tax credits to reach the final tax obligation.
o Compare the total tax liability with the amount withheld to determine if John is owed a refund or if he has a tax payment due.
2. Schedule A - Itemized Deductions:
o Record mortgage interest, medical expenses, and state taxes paid on Schedule A.
o Add the total of itemized deductions.
o Compare the total itemized deductions to the standard deduction for a single taxpayer.
o Decide whether John should itemize deductions or take the standard deduction.
Scenario 2: Meet Tim Scott and his wife Sarah Goldman, both diligently employed at the United States Treasury. Tim's W2 reflects income of $95,350, with $9,330 withheld. Sarah's W2 shows income of $63,390, with $5,750 withheld. As a married couple, you share your finances.
Your task is to guide Tim and Sarah through the tax preparation process, completing Form 1040, Schedule A, and Schedule 1 based on the information provided.
Follow these steps:
1. Form 1040:
o Enter Tim and Sarah's income separately on Form 1040.
o Add up your total income, withholdings and calculate your combined Adjusted Gross Income (AGI).
o Determine your taxable income after considering any eligible deductions or credits.
o Use the appropriate tax tables to calculate your federal income tax liability.
o Consider applicable tax credits to arrive at the final combined tax liability.
o Compare your total tax liability with the amount withheld for both of you to determine if you are owed a refund or if you have a tax payment due.
2. Schedule A - Itemized Deductions:
o Record Tim and Sarah's combined mortgage interest, medical expenses, and charitable donations on Schedule A.
o Add the total itemized deductions.
o Compare total itemized deductions to the standard deduction for married taxpayers.
o Decide whether Tim and Sarah should itemize deductions or take the standard deduction.
3. Schedule 1 - Additional income and adjustments to income:
o Identify any additional income, adjustments, or deductions that may apply to Tim and Sarah.
o Consider contributions to your IRA accounts and any other adjustments that affect your adjusted gross income.