Question

Kofi Allon, who is 32 years old and single, is employed as a technical consultant for a large electronics distributor. He lives at 678 Birch Street, LaMesa, CA 91941. Kofi's Social Security number is 412-34-5670 (date of birth 5/29/1987). Kofi’s W-2 contained the following information: Wages (box 1) = $ 75,350.62 Federal W/H (box 2) = $ 9,605.43 Social security wages (box 3) = $ 75,350.62 Social security W/H (box 4) = $ 4,671.74 Medicare wages (box 5) = $ 75,350.62 Medicare W/H (box 6) = $ 1,092.58 Kofi's other income includes interest on a money market account at the San Diego Credit Union of $275 and $265 in interest on a Certificate of Deposit at the Bank of California. He also made alimony payments of $650 per month to his ex-wife for ten months for a divorce agreement that was finalized on February 21, 2020. (Marta Tombe, Social Security number 412-34-5673). In addition, he had the following other expenses for 2020: Home mortgage interest $ 7,670 Auto loan interest 1,325 Credit card interest 730 Property taxes on personal residence 2,342 State income taxes 2,050 Unreimbursed hospital bills 6,300 Doctor bills 2,760 Other qualifying medical expenses 725 Income tax preparation fee 425 Job-hunting expenses 925 Cash donations to his mosque (made ratably over the year and no single contribution was greater than $250) 885 In may of 2020, Kofi’s house was broken into and his vintage 1961 Fender Stratocaster guitar was stolen. The guitar had a current fair market value of $15,750, and Kofi had paid $9,000 for the instrument in May of 2008. The guitar was uninsured. Required: Prepare a Form 1040 and a Schedule A for Kofi including any appropriate schedules. (Input all the values as positive numbers. Round your final answers to the nearest whole dollar amount. Instructions can be found on certain cells within the forms.) Use the appropriate Tax Tables.

Answer 1

To prepare a Form 1040 and a Schedule A for Kofi, we need to gather all the necessary information and complete the forms accordingly.

Step-by-step explanation:

To prepare a Form 1040 and a Schedule A for Kofi, we need to gather all the necessary information and complete the forms accordingly.

Form 1040

Kofi's income from wages is $75,350.62, which goes in line 1. His federal withholding of $9,605.43 goes in line 2. Kofi has no other income, so line 7 remains blank. For his adjusted gross income (AGI), we subtract line 2 from line 1 and enter the result in line 8a. In line 11a, we enter the standard deduction for a single filer, which is $12,400 for 2020. The taxable income (line 11b) is the difference between line 8a and line 11a. Using the IRS tax tables, we can calculate the federal income tax liability. Kofi's Social Security and Medicare taxes are self-explanatory and are filled in accordingly in lines 12a and 12b. Other taxes or penalties do not apply, so we leave line 12c blank. To calculate Kofi's refund or balance owed, we subtract line 12b from line 11b and fill in the result in line 23.

Schedule A

In Schedule A, we enter Kofi's itemized deductions. For medical expenses, we add up his unreimbursed hospital bills, doctor bills, and other qualifying medical expenses, resulting in $9,785. For state and local taxes, we combine property taxes on his personal residence and state income taxes, totaling $4,392. Kofi's home mortgage interest, auto loan interest, and credit card interest sum up to $9,725. His cash donations to his mosque amount to $885. Adding up all these deductions gives us a total of $24,787, which goes in line 16. Using the IRS tax tables, we can determine Kofi's tax credit based on his AGI. Finally, we subtract line 18 from line 16 to get the total itemized deductions (line 21), which we enter in line 12 of Form 1040.