Robert Howers (SSN:111-11-1111, Date of birth 02/05/1981) recently became a single Dad when his wife left him and their child and a divorce settlement was finalized on 3/2/2019. He and his 12 year old daughter, Aisha (SSN 222-22-2222, date of birth 5/2), live in the marital home with Robert’s 72 year old mother. His father died 10 years ago leaving his mother, Beulah (SSN: 333-33-3333 date of Birth 8/16), destitute with only his social security benefits to live on. Beulah receives $11,000 of Social security income annually. Robert provides 85% of his mother’s support annually.
Robert received the following in 2020:
$113,000 W-2 salary with $12750 withheld for federal income tax.
Interest income from a Bank of America savings account $78.
Alimony from his former spouse $11,000.
Child Support $9000.
Robert’s employer provides the family with a high deductible PPO medical insurance policy. Robert funded his family health saving account $5000 in 2020.
Robert’s great Uncle (bachelor) on his father’s side, is recently deceased (10/12/38) and left Robert 1000 shares of Boeing (BA) and 3,000 shares of Delta (DAL) airlines stock. Great Uncle Albert was a retired mechanic from the Vietnam war and then for Delta Airlines. Uncle Albert’s date of death was 10/12/18 when the FMV (fair market value) of BA was $360 a share and DAL was $52. A share. Uncle Albert purchased both stocks in 1980 for $10 a share. Robert sold all his inherited BA and DAL stock on 3/20/2020 for $95 a share and $21. The brokerage house that handled the stocks sales had no basis on file for these stocks for Robert, but did provide Robert a 1099B.
Robert has the following other items to consider:
Address: 13 Apple street, Saint Petersburg, Fl 33702
No cryptocurrency or foreign accounts and transaction exist. If they did, they would require additional reporting. See top 1040 page 1 and Sch B bottom.
Dividends from BA $2060 and DAL $1200 in 2020
Political campaign contribution $100, Clothes to Salvation Army, thrift store value $300, Cash donations to Qualified schools and places of worship $8250. Tax preparation fee paid to H&R Block in 2020 for the 2019 return was $380.00.
The mortgage interest on his home was $7950 and real estate taxes $535. The out of pocket medical expenses for his mother totaled $9185.
His total tax in 2019 was: $11332. Robert had over withheld for 2019 and left an overpayment in of $1650 anticipating his stock sales in 2020. He expects more income again in 2021 over the 2020 amounts.
For 2020 manually complete forms: 1040, Schedule 1, Sch A, B, D , 8949, 8889, 8867, Qualified Dividends and Capital Gain Tax Worksheet, State & Local sales tax deduction worksheet – line 5a and form 8812 worksheet. Please prepare one PDF of all the forms required. Omit the instructions and turn in under Assignments on Canvas before the due date. You are encouraged to work together. You will find the forms and instructions needed on www.irs.gov (Links to an external site.).
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