Practice Return 3 SCENARIO INFORMATION. Drake Tax In this scenario, you will practice entering the following:

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1 Practice Return 3 Drake Tax 2017 In this scenario, you will practice entering the following: Form W-2 Income Health Care Coverage and Exemptions Earned Income Credit and Child Tax Credit Due Diligence Child-Care Expenses Instructions This practice return will help you become familiar with return preparation in Drake Tax. Use the scenario information and the attached source documents to complete the return. After the return is complete, compare your results with the solutions provided online. Go to Support.DrakeSoftware.com for solutions and more practice returns. After logging in access Training Tools > Practice Returns. To agree with provided solutions: Suppress Forms 1040A and 1040EZ Suppress state returns by entering 0 in the Resident state field on Screen 1 Install all program updates Correct all EF diagnostic messages Attached Source Documents Form W-2 (2) Form 1095-B Child Care Statement SCENARIO INFORMATION Basset and Grey Hound are married and lived together all of 2017 in Marietta, GA. The couple has two small children. Neither Basset nor Grey is a non-resident alien or could be the qualifying child of another person. Both Basset and Grey provided a copy of their GA driver s license. Basset s license number is and it was issued on 01/01/2017 and expires 01/01/2020. Grey s license number is and was issued on 01/01/2017 and expires on 01/01/2020. TAXPAYER INFORMATION Basset Hound SSN DATE OF BIRTH Hound@1040.com OCCUPATION: Detective SPOUSE INFORMATION Grey Hound SSN DATE OF BIRTH Grey@1040.com OCCUPATION: Teacher Address: 1122 Canine Lane, Marietta, GA Phone: Drake Tax 2017 Practice Return Drake Software

2 DEPENDENT INFORMATION DEPENDENT 1 - SON Terrier Hound SSN DATE OF BIRTH MTHS IN HOME 12 CHILD CARE $ DEPENDENT 2 - SON Dachshund Hound SSN DATE OF BIRTH MTHS IN HOME 12 CHILD CARE $ Both dependents: are unmarried lived with the taxpayers in the U.S. for the entire year cannot be claimed by anyone other than the taxpayer and spouse The Hounds paid for daycare for both children because they both work full-time. The childcare statement is attached. There is no active Form 8332, Release/Revocation of Claim to Exemption for Child by Custodial Parent, or similar statement in place. INCOME During 2017, Basset Hound was employed full-time as a detective. He received Form W-2(attached) from his employer in January Grey Hound worked full-time as a middle school teacher and received Form W-2 in January HEALTH COVERAGE INFORMATION All members of the household went without health coverage for January and February, however, Basset purchased a plan which covered everyone in the household on March 1, All members of the tax household qualify for the Short-Gap exemption for January and February since each was without coverage for less than three consecutive months. The insurance provider sent the Hounds Form 1095-B in early DUE DILIGENCE INFORMATION For the purposes of this practice return, assume the following: the return was completed based on information provided to you by the taxpayer you interviewed the taxpayer, asked questions, and documented the taxpayer s responses you reviewed adequate information to determine the taxpayer is eligible to claim any credits present on the return all information provided appears to be correct, complete, and consistent reasonable inquiries were made to determine correct and complete information all inquiries were documented all record retention requirements are met the taxpayer provided documentation to substantiate eligibility for and the amount of the credits present any credits present on the return have never been disallowed or reduced in a previous year you explained the rules for EIC for taxpayers with qualifying children documentation is provided for residency of child (attached child care statement) the taxpayer s income appears to be sufficient to support the taxpayer and qualifying child Drake Tax 2017 Practice Return Drake Software

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4 2017 Statement Sunny DayCare 700 Bright Circle Marietta, GA (404) TaxID: Basset and Grey Hound 1122 Canine Ln Marietta, GA Terrier Hound Dachshund Hound Pre-K Room Toddler Room Terrier 2017 tuition $2, Dachshund 2017 tuition $2, TOTAL $5, PAYMENTS $5, BALANCE DUE $0.00

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