Problem 1 Tax Return 2 Go to the IRS web page and download a Form 1040 for

Problem 1
Tax Return 2
Go to the IRS web page and download a Form 1040 for
2015 and save it to your computer or flash drive. The
web: www.irs.gov Go to -->more forms, current forms
and publications, type 1040 in the search box. Be sure to
save this form on your computer; please "save as" Your
Name Tax Return 2"
Type into the pdf form and when it is complete be sure to
save it! Put your name on the return. Skip the address
and social security number or make up something fun.
Complete the return based on the following data:
Choose Single as your tax status (Note this is slightly
different from the last problem!) Salary $40,000 with
Federal tax withholding of 5,000, Interest Income -Chase
Bank $50 and Ford Company qualified dividends $ 3000.
Note that qualified dividends and long term capital gains
are taxed at a preferred rate. Although the taxable
income will be the same as tax return 1, the tax will be
different. You will go to the instructions and look up the
tax amount from the tax tables for the amount of taxable
income excluding the qualified dividend. That tax on
income before the dividend is then added to the amount
of the tax on the qualified dividends. The tax on qualified
dividends is multiplied by these percentages:
0% if the top regular tax rate is 10% or 15%
15% if the top regular tax rate is 25% or 28% or 33% or
35%
20% if the regular tax is 39.6%
Problem 2
Tax Return 3

Tom Jones and Doris Day, each age 42, married on September 7,
2014. Tom and Doris will file a joint return for the year. Tom's
Social Security number is 111-11-1111. Doris's Social Security
number is 123-45-6789. They live at 211 Brickstone Drive, Atlanta,
GA 30304.
Tom was divorced from Sarah Jones in March 2015. Under the
divorce agreement, Tom is to pay Sarah $1,250 per month for the
next 10 years or until Sarah's death, whichever occurs first. Tom
pays Sarah $15,000 in 2015. In addition, in January 2015, Tom pays

Sarah $50,000, which is designated as being for her share of the
marital property. Sarah's Social Security number is 123-45-6788.
Tom's salary for the year is $150,000, and his employer, BlueBus,
Inc. (Federal I.D. No. 98-7654321). His employer withheld $24,900
for Federal income taxes and $8,000 for state income taxes. The
proper amounts were withheld for FICA taxes.
Doris recently graduated from law school and is employed by
HelpMe, Inc. (Federal I.D. No. 11-1111111), as a public defender.
She receives a salary of $40,000. Her employer withheld $7,500
for Federal income taxes and $2,400 for state income taxes. The
proper amounts were withheld for FICA taxes.
Doris has $2,500 in qualified dividends on Ford Corporation stock
she inherited. Tom and Doris receive a $1,900 refund on their prior
state income taxes. They itemized deductions on their prior
Federal income tax return (total of $15,000) so the state income
tax refund is taxable.
Tom and Doris itemized this year. They pay $4,500 interest and
$1,450 property taxes on their personal residence. Their charitable
contributions total $2,400 (all to their church). They paid state
taxes with were deducted from their pay of $8,000 and 2,400.
Compute the Jones's net tax payable (or refund due) for the year.
If you use 2015 tax forms for your solution, you will need Form
1040 and Schedules A and B.
Problem 3
Tax Return 4

Reba Dixon is a fifth-grade school teacher who earned a salary of
$38,000 in 2015. She is 45 years old and has been divorced for four
years. She received $1,200 of alimony payments each month from her
former husband.
Reba and her daughter Heather (20 years old at the end of the year)
moved to Georgia in January of 2015. Reba provides more than one-half

of Heather’s support. They had been living in Colorado for the past 15
years, but ever since her divorce, Reba has been wanting to move back
to Georgia to be closer to her family. Luckily, a teaching position opened
up and Reba and Heather decided to make the move. Reba paid a
moving company $2,010 to move their personal belongings, and she and
Heather spent two days driving the 1,426 miles to Georgia. During the
trip, Reba paid $143 for lodging and $85 for meals. Reba’s mother was so
excited to have her daughter and granddaughter move back to Georgia
that she gave Reba $3,000 to help out with the moving costs.
Reba rented a home in Georgia. Heather decided to continue living at
home with her mom, but she started attending school full-time in
January, 2015 at a nearby university. She was awarded a $3,000 partial
tuition scholarship this year, and Reba helped out by paying the
remaining $500 tuition cost. If possible, Reba thought it would be best to
claim the education credit for these expenses.
Reba wasn’t sure if she would have enough items to help her benefit
from itemizing on her tax return. Reba paid $2,800 in state income taxes
and $6,500 in charitable contributions during the year. She also paid the
following medical-related expenses for her and Heather:
Insurance premiums
Medical care expenses
Prescription medicine
Nonprescription medicine
New contact lenses for Heather

$

4,795
1,100
350
100
200

A few years ago, Reba acquired several investments with her portion of
the divorce settlement. This year she reported the following income
from her investments: $2,200 of interest income from corporate bonds
and $1,500 interest income from City of Denver municipal bonds.
Overall, Reba’s stock portfolio appreciated by $12,000 but she did not
sell any of her stocks.
Reba had $10,000 of federal income taxes withheld by her employer.
Problem 4

Tax Return 5
Addison Brown, single and age 32. She is employed as regional sales
manager by PILLS Corporation, a manufacturer and distributor of
vitamins and food supplements. Addison is paid an annual salary of
$50,000.
Addison also has a bookkeeping and tax business that she runs out of
her home. Her fees income collected for the year was $25,000. Out of
1,500 square feet of living space in her apartment, Addison has set
aside 300 square feet as an office. Expenses for 2015 relating to the
office are listed below.

Her self-employment-related expenses for 2015 are summarized
below.

The business gifts were boxes of candy costing $30 sent to 18 clients
at Christmas. The continuing education was a noncredit course
dealing with improving people management skills that Addison took
online.
She uses her automobile 10% for business and 90% for personal. The
automobile was purchased new on June 30, 2012, for $37,000 (no
trade-in was involved). During 2015, Addison drove 15,000 miles
(total) and incurred and paid the following expenses relating to the
automobile:

Besides the items already mentioned, Addison had the following
receipts in 2015: Bank of America interest income of $250 and City
of Dallas bond interest of $1,000.
Addison's expenditures for 2015 (not previously noted) are
summarized below.
Medical
State and local tax
3000
Church pledge Paid
Credit card interest
Tax return preparation fee

7000
6000
2000
500

Her employer withheld $9,600 for Federal income tax purposes,
Compute Addison's Federal income tax payable (or refund) for 2015.