Federal Income Tax Return
Please complete the 2019 federal income tax return for Joseph and Jessie Butler. If something is unclear to you or required information is missing, please use Blackboard Discussions Forums to obtain guidance.
Joseph and Jessie Butler are married and live in Bridgewater, MA. Joseph is 42 years old and a design engineer for a manufacturing company. Jessie is 45 years old and runs a craft business from their home. Jessie spends considerable time and effort on her craft business, and it has been consistently profitable over the years. The Butler’s have one child Lizzie (age 19). Lizzie attends State University and works for a landscaping business during the summer – she earned $5,500 in 2019.
The Butler’s plan to file a joint tax return and provided the following information:
- Joseph’s social security number is 123-45-6789
- Jessie’s social security number is 987-65-4321
- Lizzie’s social security number is 012-34-5678
- Mailing address is 23 Summer Street, Bridgewater, MA 02325
Joseph Butler reported the following information relating to his employment during the year:
Federal Income Tax Withholding
MA State Income Tax Withholding
Joseph’s employer withheld all payroll taxes it was required to withhold. The entire Butler family was covered by minimum essential health insurance during each month in 2019. This insurance cost was $12,000 for 2019 and paid for by Joseph’s employer. Joseph injured himself at work and was out of work for three weeks in March 2019. Joseph received workman’s compensation payments of $5,000 during that period of time.
Jessie Butler uses the cash method to account for her business activities which were as follows in 2019:
Craft sales $18,400
Advertising expense $2,230
Supplies expense $4,260
Postage expense $145
Jessie made the following estimated tax payments in 2019: $4,000 for Federal income taxes and $1,000 for MA state income taxes. Jessie also received a $20,000 gift in 2019 from her rich aunt who wanted to help her grow her business.
Joseph and Jessie also received the following investment income during the year:
Interest income from Certificate of Deposit $1,650
Interest income from U.S. Treasury Bond $716
Interest income from Municipal Bond $920
The Butler’s did not own, control or manage any foreign bank accounts, nor were they grantors or beneficiaries of a foreign trust during the tax year.
In May of 2019, the Butler’s received a Federal income tax refund of $1,200 and a Massachusetts state income tax refund of $500 because they had overpaid both their Federal and MA state individual income taxes in 2018. On their 2018 Federal income tax return, the Butler’s itemized their deductions and received full tax benefit (deduction) for the state tax income taxes paid in 2018.
Joseph enjoys sports and wages bets on the local sports teams. Joseph had gambling winnings of $500 during 2019 and gambling losses of $1,300.
Lizzie won an iPad valued at $300 and a scholarship for $1,000 towards tuition by competing in her University’s 2019 technology contest.
The Butler’s paid the following expenses during the year:
Mortgage interest on principal residence $14,000
Real property taxes on residence $6,200
Vehicle property tax based upon value $310
State sales tax $1,150
Unreimbursed medical expenses $1,690
Unreimbursed employee business expenses for Joseph $2,400
Interest on credit cards $300
Interest on loans to pay Lizzie’s tuition $3,200
College tuition paid for Lizzie $5,780
College room & board paid for Lizzie $12,620
Cash contribution to American Red Cross $525
The Butlers received a Form 1098-T from State University whose address and employer identification number (EIN) are as follows:
11 Ivory Tower Road
Western, MA 08088
Require to fill out all of these information for Form 1040, Schedule A and Schedule 1
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