Jack White – Campus Fellow Training Exercise
Jack White was married, but got divorced in 2011. Jack has two children, Scarlett and Henry, who live with him all year long except for the weekends when they stay with their mother, Karen Elson. Jack paid all the household expenses and provided all of Scarlett and Henry’s support.
Jack’s friend Brendan Benson fell on some hard times and moved in with Jack on January 1, 2014 and lived with Jack all year. He couldn’t find a job and Jack provided all his support for the year.
Wages: Jack worked at an upholstery shop in Birmingham, which he received a Form W-2 for.
Business Income: Jack is also self-employed as a musician, and received a 1099-MISC for a couple of shows he played at the Ryman Auditorium. He also played a few gigs at Workplay Theater, but he was paid $7,000 in cash for his performances. Jack used the cash method of accounting, materially participated in the business, and had no employees.
Jack had the following expenses: Ø Supplies (including guitars, drumsticks, etc.) - $4,000 Ø Professional fees to Jack’s agent - $1,200 Ø Advertising - $1,000
Jack also used his vehicle for business travel of 6,500 miles. He put his car into service on 01/01/2005. He has written documentation of all his mileage. He also uses his car for personal use as well, and does not have another vehicle for personal use.
Retirement Income Jack took an early distribution from his Individual Retirement Account. The distribution code listed indicates it was an early distribution with no known exception.
Dividends/Foreign Tax: Jack received a Form 1099-DIV, which included an amount for foreign tax paid.
Alimony: Jack paid $100 a month in alimony to his ex-wife, Karen Olson (xxx-xx-0196), for her rent. He also received $150 a month from his other ex-wife, Meg White, to help cover some medical expenses.
College Tuition Payments: Jack’s daughter, Scarlett, is exceptionally bright and began attending college early this year. Jack paid her tuition and received a 1098-T. Jack also purchased $600 worth of books from Amazon for his daughter’s classes. Scarlett has never claimed an education credit before and has never been convicted for a felony drug possession. Jack isn’t sure if it more beneficial to take the tuition and fees adjustment or an education credit.
SAVEFIRST | JACK WHITE – CAMPUS FELLOW TRAINING EXERCISE Childcare Expenses: Jack paid Seventh Son Daycare to watch Henry while he was working late. He paid Seventh Son Daycare (17-8493844) $450 for all of 2014. The daycare is location at 777 7th Ave W, Birmingham, AL 35205. Jack also paid his ex-wife, Karen Olson (xxx-xx-0196) to watch Henry while he went out of town a couple of nights for shows.
Residential Energy Credit: Jack installed an asphalt roof on his home this year, and it met the Energy Star program requirements. It cost $600 to install, not including $200 in labor costs.
He also installed an energy efficient water heater, which was certified by the CEE. The cost of the heater was $1,500, and the labor cost to install the heater was $650, including on-site installation and preparation cost of $250.
Jack also claimed a $200 residential energy credit on his previous year’s tax return.
Itemized Deductions: Jack would like to itemize his deductions. He provides you with the following receipts and income documents:
Receipt Amount Insurance premiums $1300 Doctor co-pays $200 Prescription drugs $600 Eyeglasses $150 Life insurance policy $450 Extra-strength Tylenol $25 Donation to Music is Hope Foundation $800 Donation to the British Youth Band Association $400 FMV of upholstered furniture donated to Salvation Army $800 Check for real estate taxes paid for Meg White $320 Water & sewer city tax on Jack’s residence $250 2014 hunting license $35 Personal property tax $570 Car tag $189 Interest paid on his car loan $650 2013 tax prep fee $200 Record Industry Journal $100 Safe deposit box $75 Divorce lawyer fees $700
Health Insurance Information: Jack purchased health insurance from healthcare.gov with coverage beginning on March 1, and received a Form 1095-A. He did not have coverage in January and February. Scarlett and Henry were covered by CHIP for the entire year. Brendan did not have health insurance for the entire tax year.
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