Analyzing and Computing Smith Family 2018 Federal Income Tax Return

This assignment requires the computation of the Smith family's 2018 federal income tax return based on a provided tax scenario. The scenario includes information about Joseph and Rita Smith, their children, and their respective incomes. Joseph is a self-employed CPA with business expenses, while Rita is a teacher. The assignment involves completing Form 1040, Schedule C for Joseph's business income and expenses, and potentially Schedule E if there is rental income. The solution requires calculating adjusted gross income, itemized deductions, tax liability, and any applicable credits. The assignment showcases the complexities of tax preparation, self-employment, and family tax situations. The solution would involve filling out the relevant tax forms and schedules accurately, considering deductions for office expenses, and calculating the correct tax liability and any potential refund or amount owed. The final solution presents a comprehensive tax return for the Smith family, demonstrating an understanding of tax laws and regulations.

Form
1040Department of the Treasury—Internal Revenue Service
U.S. Individual Income Tax Return2018 OMB No. 1545-0074 IRS Use Only—Do not write or staple in this space.
(99)
Filing status: Single Married filing jointly Married filing separately Head of household Qualifying widow(er)
Your first name and initial Last name Your social security number
Your standard deduction: Someone can claim you as a dependent You were born before January 2, 1954 You are blind
If joint return, spouse's first name and initial Last name Spouse’s social security number
Spouse standard deduction: Someone can claim your spouse as a dependent Spouse was born before January 2, 1954
Spouse is blind Spouse itemizes on a separate return or you were dual-status alien
Home address (number and street). If you have a P.O. box, see instructions. Apt. no.
City, town or post office, state, and ZIP code. If you have a foreign address, attach Schedule 6.
Full-year health care coverage
or exempt (see inst.)
Presidential Election Campaign
(see inst.) You Spouse
If more than four dependents,
see inst. and ✓ here▶
Dependents (see instructions): (2) Social security number(3) Relationship to you (4) ✓ if qualifies for(see inst.):
(1) First name Last name Child tax credit Credit for other dependents
Sign
Here
Joint return?
See instructions.
Keep a copy for
your records.
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are tr
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
▲
Your signature Date Your occupation If the IRS sent you an Identity Protection
PIN, enter it
here (see inst.)
Spouse’s signature. If a joint return, both must sign.Date Spouse’s occupation If the IRS sent you an Identity Protection
PIN, enter it
here (see inst.)
Paid
Preparer
Use Only
Preparer’s name Preparer’s signature PTIN Firm’s EIN
Firm’s name▶ Phone no.
Check if:
3rd Party Designee
Self-employed
Firm’s address▶
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040(2018)
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Form 1040 (2018) Page 2
Attach Form(s)
W-2. Also attach
Form(s) W-2G and
1099-R if tax was
withheld.
1 Wages, salaries, tips, etc. Attach Form(s) W-2. . . . . . . . . . . . . . . . 1
2a Tax-exempt interest . . . 2a b Taxable interest . . . 2b
3a Qualified dividends. . . 3a b Ordinary dividends . . 3b
4a IRAs, pensions, and annuities. 4a b Taxable amount . . . 4b
5a Social security benefits. . 5a b Taxable amount . . . 5b
6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 . . . . . 6
7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise,
subtract Schedule 1, line 36, from line 6. . . . . . . . . . . . . . . . . 7Standard
Deduction for—
• Single or married
filing separately,
$12,000
• Married filing
jointly or Qualifying
widow(er),
$24,000
• Head of
household,
$18,000
• If you checked
any box under
Standard
deduction,
see instructions.
8 Standard deduction or itemized deductions (from Schedule A). . . . . . . . . . . . 8
9 Qualified business income deduction (see instructions). . . . . . . . . . . . . . 9
10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0-. . . . . . . . 10
11 a Tax (see inst.) (check if any from:1 Form(s) 8814 2 Form 4972 3
b Add any amount from Schedule 2 and check here. . . . . . . . . . . . ▶
)
11
12 a Child tax credit/credit for other dependents b Add any amount from Schedule 3 and check here▶ 12
13 Subtract line 12 from line 11. If zero or less, enter -0-. . . . . . . . . . . . . . 13
14 Other taxes. Attach Schedule 4 .. . . . . . . . . . . . . . . . . . . 14
15 Total tax. Add lines 13 and 14. . . . . . . . . . . . . . . . . . . . 15
16 Federal income tax withheld from Forms W-2 and 1099. . . . . . . . . . . . . 16
17 Refundable credits:a EIC (see inst.) b Sch. 8812 c Form 8863
Add any amount from Schedule 5 . . . . . . . . . . . . . . 17
18 Add lines 16 and 17. These are your total payments. . . . . . . . . . . . . . 18
Refund
Direct deposit?
See instructions.
19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid. . . . 19
20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here. . . . ▶ 20a
▶ b Routing number ▶ c Type: Checking Savings
▶ d Account number
21 Amount of line 19 you want applied to your 2019 estimated tax. . ▶ 21
Amount You Owe22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions. . . ▶ 22
23 Estimated tax penalty (see instructions) .. . . . . . . ▶ 23
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040(2018)
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