Note: This problem is for the 2021 tax year.
Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6784 and 111-11-
1113, respectively. Alice's birthday is September 21, 1974, and Bruce's is June 27, 1973. They live at 473 Revere Avenue, Lowell, MA
01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (Employer Identification Number 98-
7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central
Avenue, Hauppauge, NY 11788 (Employer Identification Number 11-1111111).
The following information is shown on their Wage and Tax Statements (Form W–2) for 2021.
Line Description Alice Bruce
1 Wages, tips, other compensation $58,000 $62,100
2 Federal income tax withheld 4,500 5,300
3 Social Security wages 58,000 62,100
4 Social Security tax withheld 3,596 3,850
5 Medicare wages and tips 58,000 62,100
6 Medicare tax withheld 841 900
15 State Massachusetts Massachusetts
16 State wages, tips, etc. 58,000 62,100
17 State income tax withheld 2,950 3,100
The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1997, Social Security number 123-45-6788)
and John (born February 7, 2001, Social Security number 123-45-6780). Both children are full-time students and live with the Byrds
except when they are away at college. Cynthia earned $6,200 from a summer internship in 2021, and John earned $3,800 from a part-
time job. Both children received scholarships covering tuition and materials.
During 2021, the Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (born March 6, 1945, Social Security
number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and
Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $1,600,000 on December 28.
The Byrds had the following expenses relating to their personal residence during 2021:
Real estate property taxes $5,000
Qualified interest on home mortgage (acquistion indebtedness) 8,700
Repairs to roof 5,750
Utilities 4,100
Fire and theft insurance 1,900
The Byrds had the following medical expenses for 2021:
Medical insurance premiums $4,500
Doctor bill for Sam incurred in 2020 and not paid until 2021 7,600
Operation for Sam 8,500
Prescription medicines for Sam 900
Hospital expenses for Sam 3,500
Reimbursement from insurance company, received in 2021 3,600
The medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support.
Other relevant information follows:
When they filed their 2020 state return in 2021, the Byrds paid additional state income tax of $900.During 2021, Alice and Bruce attended a dinner dance sponsored by the Lowell Police Disability Association (a qualified charitableorganization). The Byrds paid $300 for the tickets. The cost of comparable entertainment would normally be $50.The Byrds contributed $5,000 to Lowell Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of$350) to the Salvation Army. All donations are supported by receipts, and the clothing is in very good condition.Via a crowdfunding site (gofundme.com), Alice and Bruce made a gift to a needy family who lost their home in a fire ($400). Inaddition, they made several cash gifts to homeless individuals downtown (estimated to be $65).
Instructions
In 2021, the Byrds received interest income of $2,750, which was reported on a Form 1099–INT from Second National Bank, 125Oak Street, Lowell, MA 01850 (Employer Identification Number 98-7654322).The home mortgage interest was reported on Form 1098 by Lowell Commercial Bank, P.O. Box 1000, Lowell, MA 01850 (EmployerIdentification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2021) was taken out by theByrds on May 1, 2017.Alice's employer requires that all employees wear uniforms to work. During 2021, Alice spent $850 on new uniforms and $566 onlaundry charges.Bruce paid $400 for an annual subscription to the Journal of Franchise Management and $741 for annual membership dues to hisprofessional association.Neither Alice's nor Bruce's employer reimburses for employee expenses.The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.This year the Byrds gave each of their children $2,000, which was then deposited into their Roth IRAs.Alice and Bruce paid no estimated Federal income tax, and they did not engage in any virtual currency transactions during theyear. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campaign Fund. The Byrds received theappropriate recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored.
Required:
Compute net tax payable or refund due for Alice and Bruce Byrd for 2021. If they have overpaid, they want the amount to be refunded
to them.
Make realistic assumptions about any missing data.If an amount box does not require an entry or the answer is zero, enter “0”.Enter all amounts as positive numbers.It may be necessary to complete the tax schedules before completing Form 1040.When computing the tax liability, do not round your immediate calculations. If required, round your final answers tothe nearest dollar.Use the Tax Rate Schedule provided. Do not use the Tax Tables. Note: for the Tax Planning section only, use the2022 Tax Rate Schedule found in Appendix A of the textbook.
Form 1040
Complete the Byrd's Form 1040 for 2021.
1040 U.S. Individual Income Tax Return 2021 OMB No. 1545-0074 IRS Use Only
Filing Status
Your first name and middle initial
Bruce M. Byrd
Last name Your social security number
111-11-1113
If joint return, spouse's first name
and middle initial
Alice J. Byrd
Last name Spouse's social security number
123-45-6784
Home address (number and street). If you have a P.O. box,
see instructions.
473 Revere Avenue
Apt. no. Presidential Election Campaign
Do you, or your spouse if filing jointly, want $3 to go to this
fund. Selecting an option below will not change your tax or
refund.
City, town, or post office. If you have a
foreign address, also complete spaces
below.
Lowell, MA 01850
State ZIP code
Foreign country name Foreign province/state/county Foreign
postal
code
At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?
Standard Deduction Someone can claim:
Age/BlindnessYou:
Spouse:
FormDepartment of the Treasury — Internal Revenue Service (99)
Married filing jointly
DependentsIf more than four dependents, see
instructions and check here ► ◻
(see instructions):(2) Social
security
number
(3)
Relationship
to you
(4) ✓ if qualifies for (see
instructions):
(1) First name Last name Child tax creditCredit for other
dependents
John Byrd 123-45-6780 Child
Sam Byrd 123-45-6787 Parent
◻ ◻
◻ ◻
Attach
Sch. B if
required.
1Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .1
2a Tax-exempt interest . . 2a bTaxable interest . .
. . . . . . . . 2b
3a Qualified dividends . . . 3a bOrdinary dividends
. . . . . . . . 3b
4a IRA distributions . . . . . 4a bTaxable amount . .
. . . . . . . .4b
5a Pensions and annuities 5a bTaxable amount . .
. . . . . . . .5b
Standard Deduction for–Single or Married filing separately,$12,550Married filing jointly or Qualifyingwidow(er), $25,100Head of household, $18,800If you checked any box underStandard Deduction, see instructions.
6a Social security benefits 6a bTaxable amount . .
. . . . . . . .6b
7Capital gain or (loss). Attach Schedule D if required. If not required, check here . . .
► ◻ 7
8Other income from Schedule 1, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 8
9Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income . . . . . . . . . . . .
. . ► 9
10Adjustments to income from Schedule 1, line 26 . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 10
11Subtract line 10 from line 9. This is your adjusted gross income . . . . . . . . . . . . .
. ► 11
12a Standard deduction or itemized deductions (from Schedule
A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12a
b Charitable contributions if you take the standard deduction (see
instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12b
cAdd lines 12a and 12b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 12c
13Qualified business income deduction from Form 8995 or Form 8995-A . . . . . . . . . . .
. .13
14Add lines 12c and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 14
15Taxable income. Subtract line 14 from line 11. If zero or less, enter -0- . . . . . . . .
. . . . 15
BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2021)
Form 1040 (2021) Bruce M. and Alice J. Byrd 111-11-1113 Page 2
16 Tax (see instructions). Check if any from Form(s): 1 ◻ 8814 2 ◻ 4972 3 ◻ . . 16
17 Amount from Schedule 2, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Add lines 16 and 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 Nonrefundable child tax credit or credit for other dependents from Schedule 8812 . . . . 19
20 Amount from Schedule 3, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21 Add lines 19 and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22 Subtract line 21 from line 18. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . 22
23 Other taxes, including self-employment tax, from Schedule 2, line 21 . . . . . . . . . . . . . . 23
24 Add lines 22 and 23. This is your total tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ► 24
25 Federal income tax withheld from: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25a
b Form(s) 1099 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25b
c Other forms (see instructions) . . . . . . . . . . . . . . . . . . . . . . 25c
d Add lines 25a through 25c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25d
If you have a
qualifying child,
attach Sch. EIC.
26 2021 estimated tax payments and amount applied from 2020 return . . . . . . . . . . . . . . 26
27a Earned income credit (EIC) . . . . . . . . . . . . . . . . . . . . . . . . . 27a
Check here if you were born after January 1, 1998, and before January 2, 2004, and you satisfy
all the other requirements for taxpayers who are at least age 18, to claim the EIC. See
instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ► ▢
b Nontaxable combat pay election . . 27b
c Prior year (2019) earned income . . 27c
28 Refundable child tax credit or additional child tax credit from Schedule 8812 . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 28
29 American opportunity credit from Form 8863, line 8 . . . . . . . . 29
30 Recovery rebate credit. See instructions . . . . . . . . . . . . . . . . 30
31 Amount from Schedule 3, line 15 . . . . . . . . . . . . . . . . . . . . . 31
32 Add lines 27a and 28 through 31. These are your total other payments and refundable credits . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ► 32
33 Add lines 25d, 26, and 32. These are your total payments . . . . . . . . . . . . . . . . . . . ► 33
Refund 34 If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here ► ◻ 35a
Direct deposit? ► b Routing number ► c Type: ◻ Checking ◻ Savings
See
instructions.► d Account number
36 Amount of line 34 you want applied to your 2022 estimated tax . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . ► 36
Amount
You
Owe
37Amount You Owe. Subtract line 33 from line 24. For details on how to pay, see instructions . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ►37
38 Estimated tax penalty (see instructions) . . . . . . . . . . . . . . ► 38
Third Party
Designee
Do you want to allow another person to discuss this return with the IRS? See
instructions. ►
▢ Yes. Complete
below.
☒ No
Designee's
name ►
Phone
no. ►
Personal identification
number (PIN) ►
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 true, 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
Manager
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
Manager
If the IRS sent your spouse an Identity
Protection PIN, enter it here
(see inst.) ►
Phone no. Email address
Paid Preparer Use Only
Preparer's name Preparer's signature
Self-Prepared
Date PTIN Check if:
◻ Self-employed
Firm's name ► Phone no.
Firm's address ► Firm's EIN ►
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2021)
Schedule A
Complete Alice and Bruce Byrd's Schedule A for 2021.
SCHEDULE A(Form 1040)
Department of the Treasury Internal
Revenue Service (99)
Itemized Deductions► Go to www.irs.gov/ScheduleA for instructions and the latest
information.
► Attach to Form 1040 or 1040-SR.
Caution: If you are claiming a net qualified disaster loss on Form 4684,
see the instructions for line 16.
OMB No. 1545-
0074
2021Attachment
Sequence No.
07
Name(s) shown on Form 1040 or 1040-SR
Bruce M. and Alice J. Byrd
Your social security number
111-11-1113
Caution: Do not include expenses reimbursed or paid by others.
Medical and Dental
Expenses
1 Medical and dental expenses (see instructions) . . . . . . . . . . 1
2 Enter amount from Form 1040 or 1040-SR, line 11. . . . . . . . . . . . . . . . . . . . . . 2
3 Multiply line 2 by 7.5% (0.075) . . . . . . . . . . . . . . . . . . . . . . 3
4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- . . . . . . . . . . . . . . . . . 4
Taxes You Paid 5 State and local taxes.
a State and local income taxes or general sales taxes. You may include either income taxes
or general sales taxes on line 5a, but not both. If you elect to include general sales taxes
instead of income taxes, check this box . . . . . . . . . . . . . . . . . . . ► ◻ 5a
b State and local real estate taxes (see instructions) . . . . . . . . . 5b
c State and local personal property taxes . . . . . . . . . . . . . . . . 5c
d Add lines 5a through 5c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5d
e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately) . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 5e
6 Other taxes. List type and amount ► _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 6
7 Add lines 5e and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interest You Paid
Caution:
Your mortgage interest
deduction may be limited (see
instructions).
8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s)
to buy, build, or improve your home, see instructions and check this box . . . . . . . . . . . .
. . . . ► ◻
a Home mortgage interest and points reported to you on Form 1098. See instructions if
limited . . . . . . . . . . . . . . . . . . . . . . . . . . 8a
b Home mortgage interest not reported to you on Form 1098. See
instructions if limited. If paid to the person from whom you
bought the home, see instructions and show that person's name,
identifying no., and address ► _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 8b
c Points not reported to you on Form 1098. See instructions for special rules . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . 8c
d Mortage insurance premiums (see instructions) . . . . . . . . . . . . . . 8d
e Add lines 8a through 8d . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8e
9 Investment interest. Attach Form 4952 if required. See instructions. 9
10 Add lines 8e and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Gifts to Charity
Caution:
If you made a gift and got a
benefit for it, see instructions.
11 Gifts by cash or check. If you made any gift of $250 or more,
see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Other than by cash or check. If you made any gift of $250 or more, see instructions. You
must attach Form 8283 if over $500 . . . . 12
13 Carryover from prior year . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 Add lines 11 through 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Casualty and Theft Losses15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified disaster
losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions. 15
Other Itemized Deductions16 Other—from list in instructions. List type and amount ► _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
16
Total Itemized
Deductions
17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on
Form 1040 or 1040-SR, line 12a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 If you elect to itemize deductions even though they are less than your standard deduction,
check this box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ► ◻
BAA For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Schedule A (Form 1040) 2021
Schedule B
Complete Alice and Bruce Byrd's Schedule B 2021.
SCHEDULE B(Form 1040)
Department of the Treasury Internal Revenue
Service (99)
Interest and Ordinary Dividends
▶ Go to www.irs.gov/ScheduleB for instructions and the latest
information.
▶ Attach to Form 1040 or 1040-SR.
OMB No. 1545-
0074
2021Attachment
Sequence No.
08
Name(s) shown on return
Bruce M. and Alice J. Byrd
Your social security number
111-11-1113
Part I
Interest
(See instructions and the instructions for Form 1040,
line 2b.)
Note: If you received a Form 1099-INT, Form 1099-
OID, or substitute statement from a brokerage firm, list
the firm's name as the payer and enter the total
interest shown on that form.
1 List name of payer. If any interest is from a seller-financed
mortgage and the buyer used the property as a personal residence,
see the instructions and list this interest first. Also, show that
buyer's social security number and address ▶
Amount
1
2Add the amounts on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .2
3 Excludable interest on series EE and I U.S. savings bonds issued
after 1989. Attach Form 8815 . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .3
4 Subtract line 3 from line 2. Enter the result here and on Form 1040
or 1040-SR,
line 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . ▶ 4
Note: If line 4 is over $1,500, you must complete Part III. Amount
Part II
Ordinary
Dividends
(See instructions and the instructions for Form 1040,
line 3b.)
5 List name of payer ▶ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _
5
IRS
Note: If you received a Form 1099-DIV or substitute
statement from a brokerage firm, list the firm's name
as the payer and enter the ordinary dividends shown on
that form.
6 Add the amounts on line 5. Enter the total here and on Form 1040
or 1040-SR,
line 3b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . ▶ 6
Note: If line 6 is over $1,500, you must complete Part III.
Part III You must complete this part if you (a) had over $1,500 of taxable interest or ordinary
dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor
of, or a transferor to, a foreign trust.Yes No
Foreign
Accounts
and Trusts
Caution: If required, failure to file
FinCEN Form 114 may result in
substantial penalties. See
instructions.
7a At any time during 2021, did you have a financial interest in or signature authority over
a financial account (such as a bank account, securities account, or brokerage account)
located in a foreign country? See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
X
If 'Yes,' are you required to file FinCEN Form 114, Report of Foreign Bank and Financial
Accounts (FBAR), to report that financial interest or signature authority? See FinCEN
Form 114 and its instructions for filing requirements and exceptions to those
requirements . . . . . . . . . . .
b If you are required to file FinCEN Form 114, enter the name of the foreign country
where the financial account is located ▶ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _
8 During 2021, did you receive a distribution from, or were you the grantor of, or
transferor to, a foreign trust? If 'Yes,' you may have to file Form 3520. See instructions
. . . . . . . . .
X
BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule B (Form 1040) 2021
Schedule 8812
Complete Alice and Bruce Byrd's Schedule 8812.
SCHEDULE 8812(Form 1040)
Department of the Treasury Internal Revenue
Service (99)
Credits for Qualifying Children
and Other Dependents▶ Attach to Form 1040, 1040-SR, or 1040-NR.
▶ Go to www.irs.gov/Schedule8812 for instructions and the
latest information.
OMB No. 1545-
0074
2021Attachment
Sequence No.
47
Name(s) shown on return
Bruce M. and Alice J. Byrd
Your social security number
111-11-1113
Part I-A Child Tax Credit and Credit for Other Dependents
1 Enter the amount from line 11 of your Form 1040, 1040-SR, or 1040-NR . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2a
Enter income from Puerto Rico that you excluded . . . . . . . . . . . . . . . . . . . . . . . . 2a
b Enter the amounts from lines 45 and 50 of your Form 2555 . . . . . . . . . . . . . . . . . 2b
c Enter the amount from line 15 of your Form 4563 . . . . . . . . . . . . . . . . . . . . . . . . 2c
d Add lines 2a through 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2d
3 Add lines 1 and 2d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4a
Number of qualifying children under age 18 with the required social security number
4a
b Number of children included on line 4a who were under age 6 at the end of 2021 . . 4b
c Subtract line 4b from line 4a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4c
5 If line 4a is more than zero, enter the amount from the Line 5 Worksheet; otherwise, enter -0- . . . . . . . . . 5
6 Number of other dependents, including any qualifying children who are not under age 18 or
who do not have the required social security number . . . . . . . . . . . . . . 6
Caution: Do not include yourself, your spouse, or anyone who is not a U.S. citizen, U.S. national, or U.S. resident alien. Also, do
not include anyone you included on line 4a.
7 Multiply line 6 by $500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Add lines 5 and 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Enter the amount shown below for your filing status.
• Married filing jointly—$400,000
}• All other filing statuses—$200,000. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 9
10 Subtract line 9 from line 3.
• If zero or less, enter -0-.
}• If more than zero and not a multiple of $1,000, enter the next multiple of $1,000. For
example, if the result is $425, enter $1,000; if the result is $1,025, enter $2,000, etc. . . . . . . . . . . . . . . 10
11 Multiply line 10 by 5% (0.05) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Subtract line 11 from line 8. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Check all the boxes that apply to you (or your spouse if married filing jointly).
A Check here if you (or your spouse if married filing jointly) have a principal place of abode in the United States for more than
half of 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ☒B Check here if you (or your spouse if married filing jointly) are a bona fide resident of Puerto Rico for 2021 ◻
Part I-B Filers Who Check a Box on Line 13
Caution: If you did not check a box on line 13, do not complete Part I-B; instead, skip to Part I-C.
14a Enter the smaller of line 7 or line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14a
b Subtract line 14a from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14b
c If line 14a is zero, enter -0-; otherwise, enter the amount from the Credit Limit Worksheet A . . . . . . . . . . 14c
d Enter the smaller of line 14a or line 14c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14d
e Add lines 14b and 14d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14e
f Enter the aggregate amount of advance child tax credit payments you (and your spouse if filing jointly) received for 2021. See
your Letter(s) 6419 for the amounts to include on this line. If you are missing Letter 6419, see the instructions before entering
an amount on this line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14f
Caution: If the amount on this line doesn’t match the aggregate amounts reported to you (and your spouse if filing jointly) on
your Letter(s) 6419, the processing of your return will be delayed.
g Subtract line 14f from line 14e. If zero or less, enter -0- on lines 14g through 14i and go to Part III . . . . . . . . 14g
h Enter the smaller of line 14d or line 14g. This is your credit for other dependents. Enter this amount on line 19 of your
Form 1040, 1040-SR, or 1040-NR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14h
i Subtract line 14h from line 14g. This is your refundable child tax credit. Enter this amount on line 28 of your Form
1040, 1040-SR, or 1040-NR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14i
For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 8812 (Form 1040) 2021
2021 Tax Rate Schedules
Use the 2021 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax
tables, the amount of tax computed may vary slightly from the amount listed in the tables.)
2021 Tax Rate Schedules
Single—Schedule X Head of household—Schedule Z
If taxable
income is:
Over—
But not
over— The tax is:
of the
amount
over—
If taxable
income is:
Over—
But not
over— The tax is:
of the
amount
over—
$ 0 $ 9,950 . . . . . . 10% $ 0 $ 0 $ 14,200 . . . . . . 10% $ 0
9,950 40,525 $ 995.00 + 12% 9,950 14,200 54,200 $ 1,420.00 + 12% 14,200
40,525 86,375 4,664.00 + 22% 40,525 54,200 86,350 6,220.00 + 22% 54,200
86,375 164,925 14,751.00 + 24% 86,375 86,350 164,900 13,293.00 + 24% 86,350
164,925 209,425 33,603.00 + 32% 164,925 164,900 209,400 32,145.00 + 32% 164,900
209,425 523,600 47,843.00 + 35% 209,425 209,400 523,600 46,385.00 + 35% 209,400
523,600 . . . . . . 157,804.25 + 37% 523,600 523,600 . . . . . . 156,355.00 + 37% 523,600
Married filing jointly or Qualifying widow(er)—Schedule Y-1 Married filing separately—Schedule Y-2
If taxable
income is:
Over—
But not
over— The tax is:
of the
amount
over—
If taxable
income is:
Over—
But not
over— The tax is:
of the
amount
over—
$ 0 $ 19,900 . . . . . . 10% $ 0 $ 0 $ 9,950 . . . . . . 10% $ 0
19,900 81,050 $ 1,990.00 + 12% 19,900 9,950 40,525 $ 995.00 + 12% 9,950
81,050 172,750 9,328.00 + 22% 81,050 40,525 86,375 4,664.00 + 22% 40,525
172,750 329,850 29,502.00 + 24% 172,750 86,375 164,925 14,751.00 + 24% 86,375
329,850 418,850 67,206.00 + 32% 329,850 164,925 209,425 33,603.00 + 32% 164,925
418,850 628,300 95,686.00 + 35% 418,850 209,425 314,150 47,843.00 + 35% 209,425
628,300 . . . . . . 168,993.50 + 37% 628,300 314,150 . . . . . . 84,496.75 + 37% 314,150
Tax Planning for 2022
Alice and Bruce are planning some significant changes for 2022. They have provided you with the following information and asked you
to project their taxable income and tax liability for 2022. Assume that the Byrds will itemize their deductions next year.
The Byrds will invest the $1,600,000 of life insurance proceeds in short-term certificates of deposit (CDs) and use the interest forliving expenses during 2022. They expect to earn interest of $32,000 on the CDs.Bruce has been promoted to regional manager, and his salary for 2022 will be $88,000. He estimates that state income taxwithheld will increase by $4,000 and the Social Security tax withheld will be $5,456.Alice, who has been diagnosed with a serious illness, will take a leave of absence from work during 2022, so she will not receive asalary or incur any work-related expenses during the year. The estimated cost for her medical treatment is $15,400, of which$6,400 will be reimbursed by their insurance company in 2022. Their medical insurance premiums will increase to $9,769.Property taxes on their residence are expected to increase to $5,100.The Byrds' home mortgage interest expense and charitable contributions are expected to be unchanged from 2021.John will graduate from college in December 2021 and will take a job in New York City in January 2022. His starting salary will be$46,000.
In 2022, the medical expenses are reduced by 7.5% of AGI.
Assume that all of the information reported in 2021 will be the same in 2022 unless other information has been presented above. Use
the 2022 Tax Rate Schedule found in Appendix A of the textbook.
Based on this information, the Bryd's projected itemized deductions for 2022 would be taxable income would be
and the related tax liability for 2022 would be .
