Tax Accounting
Tax Preparation Project
Must be done on Tax ACT software (if possible). It will be much easier to do this assignment on Tax ACT software. As I have previously mentioned, the software can be downloaded from Tax ACT's website.
Based on the following information prepare the 2015 tax return for Jack and Jill Hill. Jack is 49 years old and Jill is 47 years old. Make up any Social Security Numbers you need.
Jack is a salesman and Jill is a self-employed writer.
You are to prepare only Jack and Jill's 2015 federal income tax return. You are not required to prepare a tax return for Bill and Hope. Bill and Hope's income information is only for purposes of determining if they qualify as dependents.
1) Jack and Jill have two kids. Bill is 22 years old and a full-time student at University. Hope is 16 years old and a sophomore in a public high school.
2) Jack and Jill paid $5,000 for tuition and books to University for Bill. He lived at home while attending University.
3) Both Bill and Hope had summer jobs and each made $5,000. They both lived in Jack and Jill's home the entire 12 months.
4) Jack has a W-2 from Sales, Inc with the following information:
- Gross wages $80,000
- Federal income tax withheld $15,000
- State income tax withheld $7,000
- Social security withheld $4,960
- Medicare withheld $1,160
5) Jill was a self-employed writer and the following are her business income and expenses:
- Gross revenue $20,000
- On 1/5/2015, she acquired a computer for $1,500 that qualified for Section 179 expensing election. It was used 100% business.
- She paid $2,500 for Supplies
- She paid $1,000 dues to the National Writers Association - an organization to help writers sell their work
6) Jack had $500 interest income from his savings account at Farmer's Bank.
7) Jill had qualifying dividends of $1,000 from her General Motors stock.
8) On 12/1/15, Jill sold 1,000 shares of the General Motors stock for $35,000. She inherited the stock on 2/1/15 from her dad. The stock originally cost her dad $20,000. The value of the stock at her dad's date of death was $45,000. When the stock was sold it was registered in Jill's name only.
9) Jack won $10,000 from the state lottery. He could prove $15,000 in gambling losses.
10) Jack and Jill paid the following medical bills:
a) Jack and Jill's doctor bills in the amount of $9,000
b) Jack and Jill paid $25,000 for Hope's nose job. The only reason Hope felt that she needed the nose job was because she was having a problem getting a prom date.
c) Jack and Jill paid Bill's doctor bills in the amount of $5,000.
d) Jack paid health insurance premiums in the amount of $6,000. The entire family was covered for all 12 months of the year.
11) Jack and Jill paid the following property tax bills:
a) $4,000 on their principal residence
b) $1,000 on their beach house, which they did not rent out
12) Jack and Jill paid the following interest:
a) $10,000 on their principal residence (the mortgage balance is $200,000)
b) $3,000 on their beach house that is only used for personal vacations and was not rented out at any time during the year (the mortgage balance is $60,000)
c) $500 in credit card interest
13) Jack and Jill listed the following as their contributions:
a) $5,000 to the Baptist church
b) $100 raffle ticket, from the Rotary Club, to win a boat
c) $1,000 to the National Democratic Party
14) In 2015, Jack and Jill paid a CPA $400 to do his previous year tax return and $600 for tax advice.
15) Jack's employer requires him to use his personal vehicle for business, but does not reimburse him for auto expenses.
a) Jack keeps a log of his mileage
b) Jack drove a total of 25,000 miles in 2015, of which, 15,000 miles were for business
c) He bought the car August 1, 2014 for $10,000
d) Jack's receipts for gas, repairs and insurance totaled $3,000
e) Jack's receipts for parking fees and bridge tolls while on business trips totaled $500
f) Last year Jack took a deduction based on the standard mileage
16) In 2015, Jack and Jill received a state income tax refund from a 2012 amended state income tax return. In 2012, they filed married filing jointly and did not itemize deductions.