Review the following scenario. Use the information provided to answer questions about the taxpayers’ 2020 return.Chris (45) and Allison (46) Castillo are married, and they will file a joint return. During the year, they earned $82,500 in wages. They also had investment income consisting of:$200 interest income from a savings account with their local bank, reported on Form 1099-INT.$350 interest income from a certificate of deposit held with another local bank, reported on Form 1099-INT.$250 interest income from a U.S. Treasury note, reported on Form 1099-INT.$500 tax-exempt interest income from a municipal bond investment, reported on Form 1099-INT.$1,700 in ordinary dividends from a mutual fund investment, reported on Form 1099-DIV.They had no other income. Question 1What amount will Chris and Allison report for taxable interest on their Form 1040? The couple's partially completed Form 1040, page 1, is shown below. You may use the form to assist you in answering this question. $550 $800 $1,050 $1,300 Question 2What amount will Chris and Allison report for their total income on Form 1040? You may refer to the couple's partially completed Form 1040, page 1, which is shown below, to assist you in answering this question. $83,050 $85,000 $85,250 $85,500 U.S. Individual Income Tax ReturnOMB No. 1545-0074IRS Use Only--Do not write or staple in this spaceFiling Status U Single Maried filing jointly U Married filing separately (MFS) U Head of household (HOH) UQualifying widow(er) (QW)Check onlyIf you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if thequalifying person is a child but not your dependentone box.Your first name and middle initialYour soclal security numberXXX-Xх-ххXхSpouse's social security numberXXX-хх-ххXхPresidential Election CampalgnCheck here if you, or yourspouse if filing jointly, want $3to go to this fund. Checking abox below will not changeLast nameCHRISCASTILLOIf joint return, spouse's first name and middle initialALLISONHome address (number and street). If you have a P.O. box, see instructions.801 HEMLOCK STREETLast nameCASTILLOApt. no.City, town, or post office. If you have a foreign address, also complete spaces below.StateZIP codeYOUR CITYYSХXXXXForeign country nameForeign province/state/countyForeign postal codeyour tax or refund.O You O SpouseAt any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes NoSomeone can claim: You as a dependent U Your spouse as a dependentO Spouse itemizes on a separate return or you were a dual-status alienStandardDeductionAge/Blindness You: Were bom before January 2, 1956 LAre blindSpouse: Was born before January 2, 1956 LIs blind(2) Social security (3) RelationshipnumberDependents (see instructions):(4) / it qualifies for (see inst.):(1) First nameto youChild tax credit | Credit for otherdependentsLast nameIf more thanthan fourdependents,see instructionsand checkhere82,500Wages, salaries, tips, etc. Attach Form(s) W-22a Tax-exempt interest . ..3a Qualified dividends....4a IRA distributions1AttachSch. Bifrequired.2ab Taxable interestb Ordinary dividendsb Taxable amountb Taxable amountЗа4a4bStandard5a Pensions and annuities5a5bDeduction for-6a Social security benefitsCapital gain or (loss). Attach Schedule Dif required. If not required, check here........6ab Taxable amount6b• Single or Marriedfiling separately.87Other income from Schedule 1, line 9$12,400• Married filingjointly orQualifyingwidowter).$24,800Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is yourtotal Income -Adjustments to income:a From Schedule 1, line 22..b Charitable contributions if you take the standard deduction. See instructions....c Add lines 10a and 10b. These are your total adjustments to incomeSubtract line 10c from line 9. This is your adjusted gross Income991010a10bHead ofhousehold,$18,65010c1111If you checkedany box underStandard24,80012Standard deduction or itemized deductions (from Schedule A)1213Qualified business income deduction. Attach Form 8995 or Form 8995-A13Deduction,see instructions.14Add lines 12 and 13....14alslelel

Incomes that is included for tax interest: Wages =$82,500 Savings account=$200(exempted) Certificate…

Answered: Review the following scenario. Use the…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter13: Tax Credits And Payment Procedures

Section: Chapter Questions

Problem 40P

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Question 1

What amount will Chris and Allison report for taxable interest on their Form 1040? The couple's partially completed Form 1040, page 1, is shown below. You may use the form to assist you in answering this question.

$550
$800
$1,050
$1,300

Question 2

What amount will Chris and Allison report for their total income on Form 1040? You may refer to the couple's partially completed Form 1040, page 1, which is shown below, to assist you in answering this question.

$83,050
$85,000
$85,250
$85,500

U.S. Individual Income Tax Return
OMB No. 1545-0074
IRS Use Only--Do not write or staple in this space
Filing Status U Single Maried filing jointly U Married filing separately (MFS) U Head of household (HOH) UQualifying widow(er) (QW)
Check only
If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the
qualifying person is a child but not your dependent
one box.
Your first name and middle initial
Your soclal security number
XXX-Xх-ххXх
Spouse's social security number
XXX-хх-ххXх
Presidential Election Campalgn
Check here if you, or your
spouse if filing jointly, want $3
to go to this fund. Checking a
box below will not change
Last name
CHRIS
CASTILLO
If joint return, spouse's first name and middle initial
ALLISON
Home address (number and street). If you have a P.O. box, see instructions.
801 HEMLOCK STREET
Last name
CASTILLO
Apt. no.
City, town, or post office. If you have a foreign address, also complete spaces below.
State
ZIP code
YOUR CITY
YS
ХXXXX
Foreign country name
Foreign province/state/county
Foreign postal code
your tax or refund.
O You O Spouse
At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No
Someone can claim: You as a dependent U Your spouse as a dependent
O Spouse itemizes on a separate return or you were a dual-status alien
Standard
Deduction
Age/Blindness You: Were bom before January 2, 1956 LAre blind
Spouse: Was born before January 2, 1956 LIs blind
(2) Social security (3) Relationship
number
Dependents (see instructions):
(4) / it qualifies for (see inst.):
(1) First name
to you
Child tax credit | Credit for other
dependents
Last name
If more than
than four
dependents,
see instructions
and check
here
82,500
Wages, salaries, tips, etc. Attach Form(s) W-2
2a Tax-exempt interest . ..
3a Qualified dividends....
4a IRA distributions
1
Attach
Sch. Bif
required.
2a
b Taxable interest
b Ordinary dividends
b Taxable amount
b Taxable amount
За
4a
4b
Standard
5a Pensions and annuities
5a
5b
Deduction for-
6a Social security benefits
Capital gain or (loss). Attach Schedule Dif required. If not required, check here........
6a
b Taxable amount
6b
• Single or Married
filing separately.
8
7
Other income from Schedule 1, line 9
$12,400
• Married filing
jointly or
Qualifying
widowter).
$24,800
Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is yourtotal Income -
Adjustments to income:
a From Schedule 1, line 22..
b Charitable contributions if you take the standard deduction. See instructions....
c Add lines 10a and 10b. These are your total adjustments to income
Subtract line 10c from line 9. This is your adjusted gross Income
9
9
10
10a
10b
Head of
household,
$18,650
10c
11
11
If you checked
any box under
Standard
24,800
12
Standard deduction or itemized deductions (from Schedule A)
12
13
Qualified business income deduction. Attach Form 8995 or Form 8995-A
13
Deduction,
see instructions.
14
Add lines 12 and 13....
14
alslelel

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