Tax Return-Individual Number Three (after Chapter 7)

Instructions:

Please complete the required federal individual income tax return forms for Bob and Melissa Grant for the 2013 tax year. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps.

Bob (age 43) and Melissa Grant (age 43) are married and live in Lexington, Kentucky. The Grants have two children Jared, age 15, and Alese, age 12. The Grants would like to file a joint tax return for the year.

The following information relates to the Grants’ tax year:

  • Bob’s Social Security number is 987-45-1234
  • Melissa’s Social Security number is 494-37-4893
  • Jared’s Social Security number is 412-32-5690
  • Alese’s Social Security number is 412-32-6940
  • The Grants’ mailing address is 95 Hickory Road, Lexington, Kentucky 40502.
  • Jared and Alese are tax dependents for federal tax purposes

Bob Grant received the following during the year:

Employer / Gross Wages / Federal Income Tax Withholding / State Income Tax Withholding
National Storage / $66,200 / $8,000 / $3,750
Lexington Little League / $2,710 / 0 / 0

Melissa Grant received the following during the year:

Employer / Gross Wages / Federal Income Tax Withholding / State Income Tax Withholding
Jensen Photography / $24,500 / $2,450 / $1,225

All applicable and appropriate payroll taxes were withheld by Grants’ respective employers.

The Grants also received the following during the year:

Interest income from First Kentucky Bank$130

Interest income from City of Lexington, KY Bond$450

Interest income from U.S. Treasury Bond$675

Interest income from Nevada State School Board Bond$150

Workers’ compensation payments to Bob$4,350

Disability payments received by Bob on account of injury$3,500

  • National Storage paid 100% of the premiums on the policy and included the premium payments in Bob’s taxable wages

Receipt of payment by Melissa as a result of a lawsuit for damages sustained in a car accident:

  • Medical Expenses$2,500
  • Emotional Distress$12,000
  • Punitive Damages$10,000

Total$24,500

Eight years ago, Melissa purchased an annuity contract for $88,000. She received her first annuity payment on January 1, 2013. The annuity will pay Melissa $15,000 per year for ten years (beginning with this year). The $15,000 payment was reported to Melissa on Form 1099-R for the current year (box 7 contained an entry of “7” on the form).

The Grants did not own, control or manage any foreign bank accounts nor were they a grantor or beneficiary of a foreign trust during the tax year.

The Grants paid or incurred the following expenses during the year:

Dentist/Orthodontist (unreimbursed by insurance)$10,500

Doctors (unreimbursed by insurance)$ 625

Prescriptions (unreimbursed by insurance)$ 380

KY state tax payment made on 4/15/13 for 2012 liability$ 1,350

Real property taxes on residence$ 1,800

Vehicle registration fee based upon age of vehicle$ 250

Mortgage interest on principal residence$ 8,560

Interest paid on borrowed money to purchase the City of

Lexington, KY municipal bonds$ 400

Interest paid on borrowed money to purchase

U.S. Treasury bonds$ 240

Contribution to the Red Cross$ 1,000

Contribution to Senator Rick Hartley’s Re-election Campaign$ 2,500

Contribution to First Baptist Church of Kentucky$ 6,000

Fee paid to Jones & Company, CPAs for tax preparation$ 200

In addition, Bob drove 6,750 miles commuting to work and Melissa drove 8,230 miles commuting to work. The Grants have represented to you that they maintained careful logs to support their respective mileage.

The Grants drove 465 miles in total to receive medical treatment at a hospital in April.

During the year, the Grants’ personal residence was burglarized on October 1. The theft occurred during the day while both the Grants were at work and their children were at school. The Grants had the following personal property stolen:

Item / Purchase Date / Fair Value on Date of Theft / Tax Basis of Item / Insurance Reimbursement Received
Laptop computer and Printer / 09/01/2013 / 3,000 / 3,000 / 500
Rifle / 03/01/2011 / 2,000 / 2,500 / 500
TV/Projector / 03/01/2011 / 5,000 / 13,000 / 1,000
2006 Honda Pilot / 07/01/2012 / 4,000 / 6,500 / 500
Total / 14,000 / 25,000 / 2,500

The Grants want to contribute to the Presidential Election Campaign. The Grants would like to receive a refund (if any) of any tax they may have overpaid for the year. Their preferred method of receiving the refund is by check.

1