70.2K

Verified Solution

Link Copied!

Instructions Review the scenario below and determine which IRS tax form is required to complete the task. Visit the IRS website and Please complete the 2020 federal income tax return for Bob and Melissa Grant. 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.

Tax Scenario

Bob (age 43) and Melissa (age 43) Grant 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:

• Bobs Social Security number is 987-45-1235
• Melissas Social Security number is 494-37-4893
• Jareds Social Security number is 412-32-5690
• Aleses 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 Grants Forms W-2 provided the following wages and withholding for the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
National Storage	66,200	8,000	3,750
Lexington Little League	4,710	0	0

Melissa Grants Form W-2 provided the following wages and withholding for the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
Jensen Photography	44,500	5,450	2,225

All applicable and appropriate payroll taxes were withheld by the Grants respective employers. All the Grant family was covered by minimum essential health insurance during each month in 2020. The insurance was provided by Bobs primary employer, National Storage.

The Grants also received the following during the year:

Item	Amount
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 due to injury	3,500

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

Melissa received the following payments due to a lawsuit she filed for damages sustained in a car accident:

Item	Amount
Medical Expenses for physical injuries	$2,500
Emotional Distress (from having been physically injured)	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, 2020. 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 grantors or beneficiaries of a foreign trust during the tax year. Also, the Grants did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency.

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

Item	Amount
Dentist/Orthodontist (unreimbursed by insurance)	$10,500
Doctor fees (unreimbursed by insurance)	2,625
Prescriptions (unreimbursed by insurance)	1,380
KY state tax payment made on 4/15/2020 for 2019 tax return liability	1,350
KY state income taxes withheld during 2020	5,975
Real property taxes on residence	3,800
Vehicle registration fee based upon age of vehicle	1,250
Mortgage interest on principal residence	18,560
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 Hartleys 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. The Grants received two Economic Impact Payments (stimulus checks) in the full amount before filing their 2020 tax return.

The Grants both want to contribute to the Presidential Election Campaign Fund. 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.

Answer & Explanation Solved by verified expert

See Answer