Earned income credit and credit for other dependents

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Reference no: EM132252422

Matthew and Mary Donnelly Directions Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario. Note: When entering Social Security numbers (SSNs) or Employer Identification Numbers (EINs), replace the Xs as directed, or with any four digits of your choice. Interview Notes • Matthew and Mary are married and want to file a joint return. They provided all the cost of keeping up the home and all of the support for their son Ryan. • Ryan has no income and no filing requirement. • Matthew retired and began receiving retirement income on April 1, 2018. No distributions were received prior to his retirement. Matthew selected a joint survivor annuity for these payments. • Matthew was covered by Medicare all year. Mary and Ryan had minimum essential healthcare coverage (MEC) through Mary’s employer until October 14th when she was laid off. Mary and Ryan did not have MEC all of November and December 2018. • Matthew and Mary stated if they are entitled to a refund, they want half of it deposited into their checking account and the other half deposited into their savings account. The checking account number is 123456789 and the savings account number is 987654321.

Test Questions

1. Ryan qualifies the Donnellys for which of the following credits? a. Earned income credit b. Credit for other dependents c. Child tax credit d. Both a and b

2. Mary and Ryan did not have health care coverage that qualifies as minimum essential coverage for November and December 2018. Do they qualify for any exemptions? a. No, they will have to pay an individual shared responsibility payment. b. Yes, they qualify for a short-term coverage exemption. c. Yes, they qualify for an unaffordable coverage exemption. d. Yes, but only Ryan qualifies for an exemption.

3. What is the total net amount of capital gain or loss shown on Schedule D, Capital Gains and Losses? a. $450 loss b. $638 gain c. $743 gain d. $1,088 gain

4. What is the combined age used to calculate the taxable portion of the pension using the Simplified Method? ________.

5. Is Matthew’s Social Security income taxable? a. Yes, a portion of the Social Security income is taxable. b. Yes, all of the Social Security income is taxable. c. No, because their total income is less than $32,000. d. No, Social Security benefits are never taxable.

6. The Donnellys want to split their refund between savings and checking accounts. How is this accomplished, if possible? a. Complete Form 8888, Allocation of Refund (Including Savings Bond Purchases). b. Splitting a refund is not possible. c. This can only be accomplished if filing a paper return. d. The Donnellys do not have an overpayment on their return.

7. What is the total income tax withholding on the tax return? $_________

Reference no: EM132252422

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