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ACT 4494 XTIA Income Tax Accounting I
Term 3, 2016
Tax Return Problem (50 Points)
Prepare a U. S. Individual Income Tax Return for 2015 based on the information below. You may use a
tax preparation program such as TurboTax to prepare the sample return. You may also do the return by
hand as long as you use official IRS forms. I strongly urge you to use a tax software program. Basic
versions of these programs are often available free of charge online. Submit your solution on
Blackboard. I prefer that your solution be in pdf. Keep a copy for your records. Sign the return as paid
preparer and include all information a paid preparer must include. You may use your student number as
though it were your PTIN.
The taxpayers are a married couple. They want to file a joint return for 2015.
Names and Social Security Numbers: James D. Roberts (432-65-5634) and Sara J. Roberts (431-29-1271)
James is employed as a civil engineer. Sara is a nurse. Neither is covered by a qualified pension plan
where they work.
Address: 602 Smart Road, Troy, Alabama 36079
Dependents: Son: Calvin K. Roberts (432-12-5463) and Daughter: Gail A. Roberts (431-49-4941)
Age in years at end of 2015:
They do NOT want any of their tax to go to the presidential election fund.
They had the following federal income tax withheld in 2015:
In addition, they applied a refund they otherwise could have received in cash for their 2014 return to
their 2015 return in the amount of $1,125.
Salary for Janes $48,000
Salary for Sara $60,000
Unemployment compensation received by Sara $1,200
Qualified dividends received from AT&T $1,500
Interest on bank accounts received from Wells Fargo Bank $1,400
Interest on City of Troy, Alabama, bonds $2,400
State of Alabama income tax refund received in 2015 for overpayment of 2014 taxes $1,200
(They itemized their deductions on Schedule A for 2014. Their total itemized deductions exceeded the
standard deduction to which they would have otherwise been entitled by $975)
James won $2,300 playing video poker at Hard Rock Casino in Tampa, Florida (Florida has no state
James and Sara own one rent house. An agent manages it for them. They had the following income and
expenses relative to the rent house:
Possible Other Deductions:
James lost $400 playing video poker at Hard Rock Casino in Biloxi, Mississippi
Real estate taxes on their primary home $750
Mortgage interest on their primary home $9,954
Cash donations to United Way $250
Cash donations to First Community Church $1,800
Alabama state income tax withheld during 2015:
Tax preparation fee paid in 2015 for the preparation of their 2014 return: $500. They did not have a
business or rental property.
James paid $3,600 in alimony to his former wife now known as Sherry N. Cash (431-01-9547)
They paid a penalty to Wells Fargo Bank on an early cancellation of a certificate of deposit $220
Contribution to a traditional IRA: James $1,800
Contribution to a Roth IRA: Sara $4,200
They want a cash refund if they are due one. They want to pay as little tax as possible. So, if you find any
other tax benefits to which they are entitled, please claim them.
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