Individual Tax Accounting and Planning Tax Return #2 Fact Pattern Name: Please complete the federal income tax return for Magdalena Schmitz for the tax year 2019. Please complete Form 1040 in its entirety (down to the amount owed or the amount to be refunded) and Schedule A. Please complete a handwritten Schedule D, with the remainder of the supporting calculations. You do not need to complete a formal Schedule D. Please show all calculations on a separate piece of paper and document the calculation of the tax liability in the space immediately below these instructions (in the space, where indicated); you must use this box to show your calculation of the tax liability or you will not earn credit on this portion of the assignment. Please order the pages of your submission in the following order: 1. 2. 3. 4. 5. 6. 7. This page The Fact Pattern page Form 1040 page 1 Form 1040 page 2 Schedules 1, 2 and 3, where applicable Schedule A Pages with supporting calculations with reference to the related item being calculated. Calculations without reference will not receive partial credit. . Show the calculation of your Tax Liability here: Individual Tax Accounting and Planning Tax Return #2 Fact Pattern Name: Magdalena Schmitz has undergone some major changes in her life recently. In 2016, at the age of 46, her husband, Roger, passed away. Magdalena has not remarried as of the end of 2018. Magdalena currently lives on a naval air base as a naval officer. She was living in Pittsburgh when her husband passed away, but she moved back to her childhood home so she could get help from her family raising her children. Magdalena has three children (ages as of the end of the year): Alyssa (23), Tyler (16), and Connor (11). Magdalena reported the following information: • • • • Magdalena’s social security number is 294-83-2845 Alyssa’s social security number is 824-84-8456 Tyler’s social security number is 824-34-9584 Connor’s social security number is 824-56-2984 Alyssa is unmarried and a full-time graduate student at Pennsylvania State University (PSU) (EIN 33-9876543). PSU’s address is 1250 Happy Valley, State College, PA 16801. She received her bachelor’s degree the year her father passed away, 2016. Alyssa works part-time in State College to help with some of her living expenses and started graduate school. Alyssa earned $2,300 in gross income during the year and had her income tax return prepared on campus by Volunteer Income Tax Assistance (VITA) volunteers. Magdalena provided support for Alyssa including paying for rent, books, tuition, food, clothes, medicine, and other support items. In total, Magdalena provided $12,700 of support for the year. PSU provided Alyssa with a Form 1098-T at year end. Alyssa’s higher education expenses for her university studies were as follows: Tuition $6,500 Books $2,000 In order to permit Magdalena to maintain a full-time job, she sends Connor to a day care program after school five days a week. During the year, Magdalena paid the day care operator $4,250 for Connor’s care. Magdalena incurred the following moving-related expenses during the year: Transport of household items Meals in transit House hunting trip $3,200 150 1,350 In addition, she drove her car the 400 miles to the naval base as part of the move. Magdalena’s W-2s for the year reported the following: Gross Wages $48,435 Federal Income Tax Withholding $900 State Income Tax Withholding $700 Magdalena’s employer withheld all applicable and appropriate payroll taxes. The entire Schmitz family was covered by minimum essential health insurance during each month in 2018. The insurance was provided by Magdalena’s employers. Individual Tax Accounting and Planning Tax Return #2 Fact Pattern Name: Magdalena also received the following during the year: Life Insurance Payment-Mutual Life (Mother’s passing) $150,000 Cash gift from her father $ 5,000 Interest income-First Bank of Bedford $ 310 Interest income-General Electric Bond $ 3,200 Interest income from U.S. Treasury Bond $ 350 Interest income-Bedford School District Municipal Bond $ 2,500 Interest income-Johnstown Rural Improvement District Bond $ 1,300 (municipal interest income) Qualified dividend income from Abbott Labs $275 Qualified dividend income from 3M $350 Dividend income (not qualified) from China Fund $2,000 PA state income tax refund* $ 325 *Refund was from state tax she paid last year. Magdalena deducted all of her state taxes as itemized deductions, and received full tax benefit for the deductions, on her prior year federal tax return.