Kyle and Kory Kent Advanced Training Exercise

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Loraine Greer
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Kyle and Kory Kent Advanced Training Exercise Kyle and Kory Kent were married, full time residents of [your

Kyle isn t sure how he should file his return this year.

community college. She has never been convicted of a felony.

They provide 100% of the support for both Yvonne and Terri.

Kyle provides you a personal check with the account information on it.

marketplace insurance from May-December.

1 Kyle and Kory Kent Advanced Training Exercise Kyle and Kory Kent were married, full time residents of [your state].unfortunately, Kory passed away on December 12 of the tax year. Kyle isn t sure how he should file his return this year. Kyle and Kory have a daughter, Yvonne, who is a full time student classified as a freshman at a local community college. She has never been convicted of a felony. Kyle s granddaughter, Terri, lived with Kyle and Kory full time. They provide 100% of the support for both Yvonne and Terri. Penny Bryant, Kory s older sister, is totally and permanently disabled and lived with Kyle and Kory all year and was fully supported by them. If there is a refund, Kyle wants it to be deposited directly into their checking account. Kyle provides you a personal check with the account information on it. In the interview, you determine the following information about the health insurance coverage: Kory- had marketplace insurance from May-December. For purposes of this exercise, you should assume Kory doesn't qualify for any exemptions for January-April. **In reality, you will always check with your Site Coordinator to see if the taxpayer/spouse/dependent qualifies for an affordability exemption** Penny- full year coverage through Medicaid Yvonne- full-year coverage through a student health plan Kyle- employer coverage from March-December of the current tax year. In the previous tax year he was covered all year. Terri- full-year coverage through CHIP SAVEFIRST: KYLE KENT ADVANCED TRAINING EERCISE 1

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5 Wages Kory was a schoolteacher and Kyle is a clerk. They both received W-2s Somersby Way Your City, Your State, Your Zip Kory Kent 8705 Somersby Way Your City, Your State, Your Zip 5 SAVEFIRST: KYLE KENT ADVANCED TRAINING EERCISE

6 Interest Taxable Refunds Kyle and Kory itemized deductions last year and received a $208 tax refund from the state. Their taxable income for last year was $49,859. Their total itemized deductions were $15,650. The amount of state income taxes was $2,998. The amount of state sales tax that was paid was $ /Kory Kent SAVEFIRST: KYLE KENT ADVANCEDTRAINING EERCISE 6

7 Alimony Income Kory was married to someone else before Kyle, and she receives $500 in alimony monthly from her former spouse. Her former spouse also gave her an extra $1000 this year to help pay some unexpected expenses that arose. Business/Self-Employment Income Kory ran a small business, which she operated out of her home, typing medical transcripts. The business code was In addition to the amount reported on Form 1099-MISC, she also received $ during the year from other doctors for this service. She had expenses including $49.00 for paper and $67.50 for a printer cartridge. Kory used her second car for picking up and delivering the typing jobs. She maintained a written record of mileage, reported 158 business miles per month for 11 months, 0 commuting miles, and 5,225 other miles. She bought the car and started using it for business on January 2, Kory had another car available for personal use. Kory Kent 7 SAVEFIRST: KYLE KENT ADVANCED TRAINING EERCISE

8 IRA Distributions Kyle did a direct transfer of his traditional IRA from Yale Security IRA to Merrill Lynch. He received Form 1099-R below. SAVEFIRST: KYLE KENT ADVANCEDTRAINING EERCISE 8

9 Pensions and Annuities Kyle was injured at his job for 5 months this year. He received distributions from his pension while recovering. He has not reached retirement age for his pension plan. Kyle is also receiving pension from a previous job working for the state Somersby Way City, State, Zip 9 SAVEFIRST: KYLE KENT ADVANCEDTRAINING EERCISE

10 Unemployment Compensation Social Security Benefits Paid by check or direct deposit: $13,682 SAVEFIRST: KYLE KENT ADVANCEDTRAINING EERCISE 10

11 Other Income Kory Kent Kory also won $800 in the Georgia State Lottery! She didn t receive a form for this, so she isn t sure if it needs to be included as income on her tax return. Educator Expenses Kory spent $150 out-of-pocket on paper, pens, pencils and other school supplies for her job as a teacher. Deductible Part of Self-Employment Tax Because Kory has business/self-employment income, she must pay the selfemployment tax. As a result, she qualifies for the deductible part of self-employment tax which helps offset the amount an employer would have paid in a traditional job.. Alimony Paid Adjustment Kyle paid $1,200 in alimony to a previous wife, Martha Matthews. Her social security number is IRA Contribution Adjustment Kory made a $2,000 contribution to her traditional IRA account. Note that on Kory's W2, she is currently covered by a retirement plan. Kyle is not covered by a retirement plan at his current job. Student Loan Interest Adjustment Kory paid $268 in interest on a student loan she incurred to obtain her teaching degree. 11 SAVEFIRST: KYLE KENT ADVANCEDTRAINING EERCISE

Itemized Deductions Even though he heard about the standard deduction increasing this year, Kyle brought in the following information just in case: Medical Insurance-post-tax, out of pocket $1,200

12 Itemized Deductions Even though he heard about the standard deduction increasing this year, Kyle brought in the following information just in case: Medical Insurance-post-tax, out of pocket $1,200 Doctor bills $653 Hospital bills $200 Life insurance $1,842 Funeral expenses $5,600 Medical mileage 1,236 total miles Prescription drugs $965 Prescription glasses $210 Tithes to church $1,730 Cash contributions to the American Cancer Society $225 Contributions to Putnam Middle School (with canceled checks and receipts) $250 Salvation Army (FMV of clothes and TV in good condition) hint:non-cash has limit! $600 Home mortgage interest (from a Form 1098 from Wells Fargo) $2,997 County real estate tax (property tax statement based on property value) $1,240 City real estate tax (property tax statement based on property value) $258 Personal property tax (based on the value) $624 Gambling losses (Kory)hint:can they deduct the full 1,000? $1000 Speeding tickets $375 Hint: After checking the itemized deductions, check the pdf printout and find the SCH A. The number on line 29 should be $10,135(2017) Credit for Child and Dependent Care Expenses Kyle and Kory paid the Happy Blessings Day Care Center $1,100 to watch Terri while they worked. The address is 128 Magical Way, City, State, Zip. Their EIN is Education Credits Kyle and Kory paid $2,750 for Yvonne s tuition. Yvonne spent $500 on textbooks and $850 for a new computer-the computer was not a course requirement. SAVEFIRST: KYLE KENT ADVANCED TRAINING EERCISE 12

13 Retirement Savings Contributions Credit, Form 8880 Because Kory contributed to her traditional IRA this year, she may qualify for a Retirement Savings Contribution Credit. However, the Kents took a distribution from their IRA of $628 and a distribution from Kyle s pension of $1,295. In figuring the credit, simply make sure these amounts are accounted for on the Form 8880 in the pdf printout. When you enter the 1099-Rs in TaxSlayer, the software will add up the distributions on line 4 of the Energy Credits, Form 5695 The Kents insulated the crawl space of their home for $ and replaced all their windows with new windows meeting IECC criteria (energy efficiency). The cost of the windows material was $7,450. The Kents have not claimed any credits in previous years on the Form Self-Employment Tax Kory must pay the self-employment tax because of her business/self-employment income. First-Time Homebuyer s Credit Repayment, Form 5405 Kyle and Kory took the First-Time Homebuyer s Credit in 2008 for the full $7,500. They still live in the home, and have made the minimum payment amount each year since 2010 and have paid back $3,500 so far. They want to make an $800 payment on their tax return this year. Hint: you have to fill out the form twice,-once for Kory, once for Kyle. You will have to divide all numbers in half accordingly! Health Care: Individual Responsibility They aren t sure if they need to make a shared responsibility payment or not. Earned Income Credit Kyle and Kory may qualify for the EIC. If they do qualify for the EIC, then answer the questions on the EIC schedule and the EIC worksheet. Additional Child Tax Credit, Schedule 8812 When the taxpayer does not qualify for the full amount of the Child Tax Credit, TaxSlayer will calculate the Additional Child Tax Credit on Schedule Refundable American Opportunity Credit Kyle wants to know if they will qualify for the refundable portion of the American Opportunity Credit. Verify the taxpayer data is entered correctly on Form Net Premium Tax Credit Kyle isn t sure if he qualifies for the premium tax credit. He brings Form 1095-A which he received from the Health Insurance Marketplace reporting insurance information for the plan they purchased for Penny (see last page) 13 SAVEFIRST: KYLE KENT ADVANCED TRAINING EERCISE

14 Amount You Want Refunded to You Kyle wants any refund or debit deposited to or withdrawn from his checking account. He provided you with a copy of a check. SAVEFIRST: KYLE KENT ADVANCED TRAINING EERCISE 14

15 Form 1095-A Department of the Treasury Internal Revenue Service Part I Recipient Information Health Insurance Marketplace Statement Do not attach to your tax return. Keep for your records. Information about Form 1095-A and its separate instructions is at 1 Marketplace identifier 2 Marketplace-assigned policy number 3 Policy issuer's name VOID CORRECTED OMB No Recipient's name 5 Recipient's SSN 6 Recipient's date of birth 7 Recipient's spouse's name 8 Recipient's spouse's SSN 9 Recipient's spouse's date of birth 10 Policy start date 11 Policy termination date 12 Street address (including apartment no.) 13 City or town 14 State or province 15 Country and ZIP or foreign postal code Part II Covered Individuals A. Covered individual name B. Covered individual SSN C. Covered individual date of birth D. Coverage start date E. Coverage termination date Part III Coverage Information Month A. Monthly enrollment premiums B. Monthly second lowest cost silver plan (SLCSP) premium C. Monthly advance payment of premium tax credit 21 January 22 February 23 March 24 April 25 May 26 June 27 July 28 August 29 September 30 October 31 November 32 December 33 Annual Totals SAVEFIRST: KYLE KENT ADVANCED TRAINING EERCISE 15

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