Reasoning for Inputs on the 1040 Tax Return
David MacKusickOctober 20, 2014
In this paper, I will address the analysis of the tax return for Harold and Sarah Petersan. Harold and Sarah are a married couple, with a daughter who goes to daycare full time. Harold and Sarah also sold a house during the tax year. With all of the variables listed I have determined that a Form 1040 would be the best form for a tax return. I chose the 1040 because it is the most complex form with the most options. This would allow me utilize all the tax credits so that Harold and Sarah get the educated, and bet option for their taxes. If I were to use the 1040A I would not be able to utilize the itemized deduction for the selling of the home. The 1040EZ was also not an options as they did not meet the qualification. Qualifications include being single or married filing jointly, under the age of 65, have no dependents, and have taxable income under $100,000, claim no income from Earned Income Credit. Several of the options did not meet the client and therefore the options was not valid. The first thing I had to figure out is how they would be filing the tax return. Since they are married, it narrowed it down to married filing jointly or married filing separately. Harold and Sarah each have itemized deductions. Neither have special itemizations. Their daughter Tara is a dependent to both of them since they are still married and have equal custody and care over her. Lastly, neither Harold nor Sarah have unusual circumstances with their marriage. Since the married couple is a standard married couple in IRS eyes married filing jointly is the best option for them. The next challenge is determining if Tara Peterson, the child, is determined to be a dependent of the household. To do this there are five tests to determine if they are a qualifying child. Once they have been qualified child there are three test to determine if she can be a qualified dependent. The...
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