Questions and Topics We Can Help You To Answer:
Paper Instructions:
For the purposes of this project, please disregard:
Social Security Numbers
Medicare taxes and withholding
Social Security Taxes and withholding
Net Investment Income Tax (Form 8960)
Additional Medicare Tax (Form 8959)
Sch C page 2
Alternative Minimum Tax
Instructions
Prepare a joint Federal tax return, including all applicable Schedules, for your clients Mr. and Mrs. Stark for the tax year ending 12/31/2019. Their tax information is below.
Ned Stark, taxpayer
Birthdate 2/5/1966.
Address 1234 Winterfell Way, Columbus OH 43205
Ned is employed as a high school teacher in Columbus, and he provides a Form W-2 with the following information
Gross Salary $86,500
Federal withholding $9000
Ohio withholding $2125
Columbus withholding $2088
Ned spent $600 of his own money to buy supplies for his classroom. None of this amount was reimbursed.
Catelyn Stark, spouse
Birthdate 3/6/1971
Address- same as Ned’s
Catelyn spent $750 on scratch off tickets during the year. She won a total of $175.
Catelyn is the sole proprietor of the bakery “Stark’s Sweets,” an accrual basis LLC which had the following activity in 2019:
Sales: $142,300
Down payments for Wedding cakes to be baked and delivered in January 2020: $1600
Costs of Good Sold: $39,800
Rent: $24,000
Utilities: $13,500
Legal and Professional: $5,000
Insurance: $7,000
Wages: $18,900
Payroll Taxes: $1,446
As a sole proprietor, Catelyn is subject to Self-Employment tax
Ned and Catelyn provided more than half of the total support for the following individuals, all of whom lived in their home for all of 2019:
Jon, their adopted son, age 23 was enrolled full time in college for 9 months of the year. This is Jon’s second year of college.
Sansa, their biological daughter, age 21, was enrolled in college for 3 months, then dropped out and got a job.
Arya, their biological daughter, age 16, earned $3,000 at her part time after school job.
Lysa, Catelyn’s sister, age 43. Lysa had a part time job at where she earned $10,300 for the year.
Everyone in the household had medical insurance coverage for the entire year.
Joint Investment Income (reported to the Starks on Form 1099-MISC)
Interest from Municipal bonds $4,700
Interest from their savings account $5,200
Catelyn’s father passed away in 2018 and left her $250,000 in his will. Catelyn received the money in April of 2019 when her father’s estate closed.
Expenses
Mortgage Interest $11,370
Real Estate Taxes $5,800
Doctor, Dentist, and Prescription costs $5,125
Medical insurance through Ned’s work $7,500
Qualified Charitable Contributions $1,225. Each individual gift was less than $250.
Tax prep fees $1500
Tuition for Jon $10,000
Quarterly estimated Federal tax payments 4 @ $1,000 each
