InstructionsNote: Since 2021 isn’t actually over yet, you’ll have to imagine that it is actually early in 2022.After telling your friends how much you are learning in your tax class, one couple has asked you to prepare their individual tax return for them. Being as generous as you are, you agree. So, you are tasked with preparing the 2021 Form 1040 (and supporting schedules) for Zach and Kelly Morris.Please help me to complete form. I do not know how to attach file, please let me know guidance.FactsZach (age 45) and Kelly (age 45) have been married for 25 years. They have a 5- year-old daughter, Jessie. They also have twin sons, Albert and Samuel (both age 19). All three children lived the entire year with Zach and Kelly.Albert is a full-time student at the University of Illinois and his tuition and fees are completely covered by his wrestling athletic scholarship (the scholarship only covers tuition and fees). Albert also works part-time at a local diner named “The Max,” where he earned wages of $6,000. The value of the scholarship is $40,000, the value of other support provided by Albert himself is $10,000, and the value of support provided by Zach and Kelly is $20,000.Samuel is a part-time (enrolled less than half-time) student at Parkland College. Samuel also works part-time at the Max and earned $4,000 during the year (Samuel spent the remainder of his free time volunteering at local charities). Zach and Kelly provide greater than half of Samuel’s support.Zach works in management and earned W-2 wages of $50,000. He also had $5,000 in federal tax withheld and $3,000 in State of Illinois taxes withheld.Kelly is a self-employed accountant. During the year, she operated a Single Member LLC (which is taxed on Schedule C). The business uses the cash method of accounting. She received $90,000 in cash payments for services provided during the year. Kelly also had $10,000 in accounts receivable at year-end (she started the year with no A/R).During the year, Kelly paid $20,000 to rent her office space (the payment covered the period from July 1, 2021 to June 30, 2022). She incurred advertising costs of $6,000, legal fees of $3,000, business insurance of $2,000, and supply expenses of $12,000. She also had meal expenses of $4,000 taking clients to dinner at various local restaurants. She incurred $2,000 in ticket expenses entertaining clients at sporting events.Kelly made no payments requiring the issuance of a Form 1099. Kelley made estimated payments during the year to the IRS of $8,000 and estimated state tax payments of $4,000.Zach and Kelly received $1,200 of interest income from bonds issued by the City of Chicago and $3,400 of interest income from a money market fund at Vanguard (Form 1099-INT).Zach and Kelly rented their home on Air-BNB during the weekend (3 nights) of a University of Illinois football game, earning $3,000. Air-BNB charged them a $300 commission.Zach won $1,200 playing slot machines at a local casino. He lost $1,400 playing the slots on a separate trip to the casino. On the night Zach lost $1,400, the casino “comped” Zach’s hotel room (a value of $300).The couple purchased 10 shares of Gamestop stock (GME) in January 2021 for $20 per share. They sold the stock later that month for $300 per share. The transaction was reported on Form 1099-B with basis reported to the IRS.The couple paid $21,000 in principal payments, $9,000 in interest payments, and $7,500 in real estate taxes on their primary residence. They incurred $8,000 in unreimbursed medical expenses. And, they made $11,000 in cash contributions to qualifying charitable organizations. They paid $3,000 in student loan interest.In addition, during 2021, the couple received a state tax refund of $2,500. On their 2020 tax return they claimed $10,000 (the limit) of their $12,000 in state and local taxes as an itemized deduction (their itemized deductions exceeded their standard deduction by $2,000).In April 2021, the family received a recovery rebate credit (a.k.a. economic impact payment). The payment was correctly computed based on their family size. Thus, no additional Recovery Rebate Credit will be claimed on their 2021 tax return (i.e., line 30 on page 2 of Form 1040 will be zero).The family lives at 123 Taxman Lane, Champaign, IL 61822. Their family SSNs are as follows: Zach (123-44-5555); Kelly (123-55-6666); Jessie (123-66-7777); Albert (123-77-8888); and Samuel (123-88-9999).Additional Information:All ages provided above are as of 12/31/2021.The couple wishes to file jointly.If the couple overpaid tax, they would like the entire overpaymentrefunded.The couple is not subject to AMT and were not subject to AMT in a prioryear.Based on their prior year tax and AGI, they will not be subject to anyunderpayment of estimated tax penalty.They do not wish to contribute to the Presidential Election Campaign fund.They do not have foreign investments.They have never owned cryptocurrency.There is no QBI loss carried over from a prior year.Complete Schedule A even if the couple does not elect to itemize.LawSocial ScienceTax law ACCY 505
