Individual/Self Employed Tax Return Assignment
Requirements Part I: Complete the Tax Formula for 2018 showing all calculations (7 points). This must be handwritten. Must be submitted at the beginning of class on Tuesday, January 29th.
Part II: Using the TaxSlayer software, prepare the tax return for 2018 (4 points). Upload the completed TaxSlayer Tax Return (pdf) to Canvas before Tuesday, January 29th, 11:59 pm. Meet Austin Drake and his son, Tom…… Client: Austin Drake Phone: (270)555-5555 Date of birth: 11/22/1981 Address: 1551 Concord Circle, Murray, KY 42071
Austin is single and is the sole provider for his 22 year old son (DOB 2/9/1996), Tom (Social Security 50100-9999). Tom is in his 3rd year of school at Murray State (FIN# 54-0000000) and lives with his dad when not away at school. Tom did receive a 1098-T which showed $9,000 in box 1 of qualified business expenses. Box 5 shows $5,000 in scholarships. Tom was a full-time student for both semesters and has never been in trouble with the law. Austin paid $1,000 additionally for Tom’s books. Tom had no other income.
Austin works as a self-employed ride share driver.
Austin is a cash-basis taxpayer who materially participates in the operation of his business. He did not make any payments that would require him to file Form 1099. Austin uses business code 485990.
He received Form 1099-MISC and a Form 1099-K from the ride share company. He had an additional $30,027 in cash and cash tip income from individual customers NOT included on the Forms 1099.
Austin provided a statement from the ride share company that indicated the amount of mileage driven and fees paid for the year. These fees are considered ordinary and necessary for the ride share business. 22,500 miles driven while transporting customers. Share ride fee $3,960 Safe driver fee $120 Airport fee $715 GPS device fee $120
Austin’s recordkeeping application shows he drove 4,570 miles between rides; 2,250 miles driven between his home and his first and last customer of the day. He had the following miscellaneous expenses: Bottled water for customers $42 Auto deodorizers $15 Car washes $85 Lunches eaten while waiting for customers $1,200
Cell phone and internet fees $2,400 (90% business usage)
The total mileage on his car for 2018 was 37,200 miles. He placed his car in service on January 6, 2017. He always takes the standard mileage rate. Austin has another vehicle available for personal use and keep detailed records.
On July 3, 2018, Austin additionally purchased and installed a permanent garage behind his home to store his business vehicle during off hours. Total cost for the garage was $80,000. On November 12th, he also purchased a lift (7 year life) for the vehicle costing $6,000. Austin wishes to take the highest deduction allowed by law.
Austin paid $300 each month in 2018 for private health insurance premiums established under his business. His insurance met the requirements for minimum essential coverage (MEC) for both he and Tom.
