Martha Smithhave asked you as their new CPA to prepare her 2021 Tax Return Form 1040 with schedules

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Martha Smithhave asked you as their new CPA to prepare her 2021

Tax Return Form 1040 with schedules. Birth year is 1986, she has 2 sons, she works full time as a Teacher (Her employer tax withheld $15727.19)

Martha Smith have asked you as their new CPA to prepare her 2021

Tax Return Form 1040 with schedules.

Birth year is 1986, she has 2 sons, she works full time as a Teacher (ATTACHED is her W-2)

Martha's husband died in 2018 from heart disease, he had a life insurance policy that he had paid

into.

Martha receives $1,500 per month from her Husband's Life Insurance

Policy.

• ??Martha also receives Municipal
  Bond interest of: $500
• ??Bank of America Savings
  Account Interest: $70
• ??Ordinary Dividends from
  Schwab: $300
• ??Qualified Dividends from
  Schwab: $290
• ??One Stock Sale of GOOGLE: purchased 1/21/2021, 3 shares for $2,000 each and sold 12/29/2021 for $2,929 each

Rental Passive Activity

• ??Income, from owning a single family" home rental in Bellevue, Washington
• ??Monthly Rent collect: $1,800
  per month for 12 months in
• 2021
• ??Expenses: Utilities $1,200,
• Yardwork $1,750, Maintenance $1,450, Repairs $500, New Fire Alarms put in $1,900
• ??House was purchased 7/1/2017
  for $440,000, and already $66,000 of tax depreciation has been taken

Lastly, her 2 sons are put in childcare from 3pm-5pm when she is working late at school.

Cost: $10,000 per year, per child

This is a qualified after-school daycare program.

 

Martha owns her home:

Her Mortgage interest is: $11,600 for 2021

King County Property taxes is:

$7,800

Her estimated sales tax is: $1,760

Donations to her church: $2,000

 

Questions:

1. What is your client's Adjust Gross Income (AGI)?

2. What is the standard deduction or itemized deductions for your client?

3. What tax credits could your client take?

4. What is the tax refund or tax amount owed for your client?