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Massachusetts Practice Return Workbook
Tax Year 2017
This workbook contains 13 returns that can be used to practice completing tax returns similar to
the ones we typically prepare at Massachusetts AARP Foundation Tax-Aide sites. The first 6-7
returns can be used by instructors for training new counselors by focusing on fundamental federal
and Massachusetts tax laws and to how to use TaxSlayer software to complete these returns. All
the returns can be used by returning or new counselors to gain additional practice using TaxSlayer
because this is only the second year we are using this new software program and changes have
been made over the summer. All the returns are for full year Massachusetts residents.
Based on last years’ experience, some returns that contain many tax elements are partitioned into
two or three parts. This partitioning should make it easier to use them in a classroom
environment. Partitioning should also provide counselors intermediate steps to verify results
before reaching the end of a long return preparation process.
For new counselor training, instructors should use charts that explain the fundamental federal and
Massachusetts tax laws inherent in the practice problems. Instructors should refer to IRS Pub
4012 and the Guide for Massachusetts Tax-Aide Volunteers (Mass Manual) as appropriate, so
counselors become accustomed to using these reference documents. A candidate set of instruction
charts are being prepared and will be posted on the Massachusetts Tax-Aide website when they
are ready. The URL for the website is: https://mataxaide.org.
All the tax forms are labelled for the 2017 tax year. TaxSlayer Practice Lab 2017 will not be
available until about mid-November for federal returns and sometime in late December or early
January 2018 for Massachusetts. Until then, counselors can use Practice 2016 and assume the tax
forms are labelled 2016. An answer key for using 2016 Practice Lab is posted on the
Massachusetts Tax-Aide website. Once 2017 software is available, the answer key will be updated
for the new software. The answer keys are based on using the taxpayer and dependent birth dates
on the Intake Sheets.
This set of practice returns incorporate the Ahmed Karr and Charles Rivers returns that were
originally prepared by Bill Long from District 18, so we thank Bill for his efforts. In past years,
these two were included in the Mass Manual. Special thanks go to the following individuals who
prepared some or all of the 13 returns, provided comments and verified the 2016 answer key:
Maria Nazzaro (District 18), Frank Dutt (District 25) and Harry Hartford (District 7).
Please send any comments on this workbook and answer key to us directly or to
We also have PDFs of each of the completed practice returns; these will not be posted on the
website, please contact us directly if you need any.
This page intentionally left blank
Courtney Smathers Fall 2017
1-1
Courtney Smathers Fall 2017
1-2
Courtney Smathers Fall 2017
1-3
Objectives
Prepare a very simple return
Determine if Courtney can claim personal exemption
Enter W-2 wage information
Enter health insurance information and discuss federal and MA requirements
Interview Notes
Courtney shows you her social security card with the number 256-00-7210.
Courtney is a full-time high school student and works part time weekends and
summers at Food Basket as a cashier to save for college.
Courtney’s mother is a single parent (divorced) who provides all of her support.
Courtney has been covered by MassHealth since her parent’s divorce.
Courtney Smathers Fall 2017
1-4
Samuel and Abigail Johnson Fall 2017
2-1
Samuel and Abigail Johnson Fall 2017
2-2
Samuel and Abigail Johnson Fall 2017
2-3
Objectives
Prepare straightforward MFJ retiree return
Enter typical income types – social security, pension, IRA’s, MA bank interest
Introduce MA worksheet to keep track of manual entries required for MA return
Interview Notes
Sam and Abby have been married for 50 years. Both are retired. They sold the big house where
they raised their family several years ago and now live in an in-law apartment in their daughter’s
home. They pay no rent.
Social security cards provided:
Samuel Johnson 357-00-7210
Abigail Johnson 358-00-7210
You review the copy of last year’s return they brought and determine that they did not itemize.
This problem is partitioned into two parts, the second builds on the first.
Part 1
Sam and Abby both collect social security.
Sam retired from Big D Incorporated, a major defense contractor, and receives a monthly pension.
Sam and Abby were both on Medicare for the full year.
Enter the following information:
Basic information and filing status
Social Security Payment (Form SSA-1099)
Pension (1099-R)
Health care information
Samuel and Abigail Johnson Fall 2017
2-4
Samuel and Abigail Johnson Fall 2017
2-5
Samuel and Abigail Johnson Fall 2017
2-6
Part 2
They have multiple CDs at their local bank
They are also both taking their required distributions from the IRAs they established from rolling
over 401(K) accounts.
Enter the following information:
Massachusetts bank interest
IRAs (1099-R)
Use MA worksheet, as required
Samuel and Abigail Johnson Fall 2017
2-7
Samuel and Abigail Johnson Fall 2017
2-8
This page left blank.
Ahmed Karr Fall 2017
3-1
Ahmed Karr Fall 2017
3-2
Ahmed Karr Fall 2017
3-3
Objectives
Prepare straightforward retiree federal return
Discuss new MA items: mandatory retirement contribution on W2, MA government
pension, Senior Circuit Breaker Credit as a homeowner
Interview Notes – Originally prepared by Bill Long, District 18
Ahmed Karr lives alone and was widowed several years ago. Ahmed is a full-time
resident of Massachusetts. You verify his Social Security number is 016-00-7210.
A life-long public servant, he has not contributed sufficiently to the Social Security
system to earn benefits. His 401(k) retirement plan has earned $2400 during the
tax year, but he has taken no distributions from that plan. During his later years he
turned to teaching at the local high school, for which service he collects the pension
reported on the 1099R that he hands you. He left teaching when his eyesight began
to fail. Now legally blind, he still sees well enough to perform a part-time job at the
public library as a Library Assistant, for which he received the W-2 also provided.
Mr. Karr is registered with the Massachusetts Commission for the Blind and shows
you a certificate to that effect.
Although he does not intend to itemize his deductions on the Federal return, nor
did he do so last year, Ahmed gives you copies of his real estate tax bills for the
year, dated May and November, totaling $2750; he received an adjustment to that
bill of $350 for his blindness, yielding a net of $2400 RE tax paid. He also paid
water bills totaling $120; his home was not connected to the public sewer system.
Years ago he inherited and took residence in the family home located near but not
on the water, assessed at $325,000.
He checks YES for both US and Massachusetts election campaign options.
Ahmed paid no estimated taxes, nor did he apply part of either of his prior year
refunds to his estimated taxes. He assures us his only bank account was for
checking; it paid no interest.
You check his prior year Massachusetts return, confirming there were neither
short-term nor long-term capital losses to carry forward and no Septic Credit to
initiate or to carry forward.
Ahmed laments the fact that he is required to make a non-elective contribution to
his Falmouth retirement, as evidenced by Box 14 of his W-2, while at the same time
collecting his Falmouth pension as indicated by their 1099R.
Ahmed offers his Tufts Health Plan of NE card, subscriber 21-234567, along with a
form Massachusetts-1099-HC from Tufts, indicating he was insured for the full
year; the 1099-HC included the Tufts FEIN: 04-3266023.
Ahmed Karr Fall 2017
3-4
Rachel E. Brown Fall 2017
4-1
Rachel E. Brown Fall 2017
4-2
`
Rachel E. Brown Fall 2017
4-3
Objectives
Prepare return for over 65 taxpayer who works part-time Discuss how to handle prior year MA tax refund Itemize deductions on federal return and discuss carryover of excess medical to MA Enter MA lottery winnings Make MA insurance entry for a private insurance firm Understand what constitutes ‘real estate tax’ for MA Senior Circuit Breaker
Interview Notes You confirm the entries on her Intake and Interview sheet (13614-C) and note her SSN on her Form SSA-1099. This problem is partitioned into three parts, each builds upon the previous. Part 1 Rachel is retired and collects Social Security. She has several other sources of income to augment that. Enter personal information and the following income and health care information:
Social Security payment (SSA-1099) Wages paid statement (W-2) Interest and Dividend statements (1099-INT / 1099-DIV) Mass HC-1099 from Blue Cross/Blue Shield - EIN 06-0000091 showing coverage for
entire year. Her subscriber number is 12345678
Rachel E. Brown Fall 2017
4-4
Rachel E. Brown Fall 2017
4-5
Rachel E. Brown Fall 2017
4-6
Part 2
Rachel receives a survivor’s pension from her late husband from Commonwealth of
Massachusetts.
She buys a $1 lottery ticket each week and had one winning ticket.
She also received a state tax refund last year – after checking her copy of last year’s return,
you see she did not itemize last year.
Enter the following (if applicable):
State tax refund notice (1099-G) A Massachusetts state pension for her late husband (1099-R) State Lottery winnings statement (W-2G)
Rachel E. Brown Fall 2017
4-7
Rachel E. Brown Fall 2017
4-8
Part 3
She is not sure whether she should itemize this year or not. She heard about the Senior
Circuit Breaker credit and wonders if she is eligible.
Rachel owns her home, has no mortgage, and pays her real estate taxes herself.
Real estate and car excise tax statements (marked “PAID” by the town clerk). Her single dwelling house is assessed at $ 263,200.
Feb: $1,015.29 May: $1,015.29 Aug: $1,066.90 (includes $14.78 in late fees) Nov: $1,052.11 Car Excise $205.00
Water and sewer bills for her home (marked “PAID” by the town clerk)
Feb: $60.43 May: $59.78 Aug: $72.96 Nov: $81.16
Medical
Medicare (from SSA-1099) $1,969 Blue Cross/Blue Shield 903 MD Co-Pay 35 Rx Drugs 626 Glasses 175 Dental 250 Medical Miles Driven 150
7 trips to MD at 20 miles RT 2 trips to Dentist at 5 miles RT
Donations
Cash donations to church $520 American Cancer Society 50
Sheryl Beringer Fall 2017
5-1
Sheryl Beringer Fall 2017
5-2
Sheryl Beringer Fall 2017
5-3
Objectives
Prepare single taxpayer return with possible dependents and eligibility for credits
Understand criteria for claiming dependents using Pub 4012
Understand how to enter federal health insurance for dependents
Enter new items: unemployment income, student loan interest
Understand how federal and MA credits are handled with software
Interview Notes - adapted from Pub 4491W
Social security cards provided
Sheryl Beringer 031-00-7210
Courtney Johnson 032-00-7210
Artis Johnson 033-00-7210
Monica Jesse 034-00-7210
Willie W. Cash 035-00-7210
Sheryl has two children, Courtney and Artis Johnson, who live with her full time. She
has been divorced since 2009. She paid all the household expenses and provided all of
her children’s support.
Sheryl’s mother, Monica Jesse, also lives with her full time and Sheryl provides over
half of her support. Monica’s only income is from Social Security and a small amount of
bank interest. She spends her SSA benefits on her medical expenses and does not
contribute to the household expenses.
Sheryl did not itemize on last year’s return.
Sheryl is repaying a student loan and received a statement from the lending institution
showing that she had paid $395.67 in interest last year.
Sheryl’s friend, Willie Cash, lost his home and moved in with her April 18 of the tax
year. He does not have any income and is currently looking for work. Sheryl would
like to claim Willie as a dependent.
Sheryl rents her home, paying $1000 per month – eligible for MA rental deduction
Sheryl’s company provides health insurance for her and her two children. She
provides Forms 1095C and MA 1099-HC showing she had full-year Aetna insurance
with a plan ID of 06-6033492 and subscriber number of 12345678. Monica is on
Medicare.
Sheryl Beringer Fall 2017
5-4
Hannah Fleming Fall 2017
6-1
Hannah Fleming Fall 2017
6-2
Hannah Fleming Fall 2017
6-3
Objectives
Prepare return for single parent with two children; ex-spouse claims one child
Discuss and enter self-employment income, tax-exempt interest, disability income,
early IRA withdrawal, prepare Schedule C
Discuss child care credit and how to enter into software
Determine how to handle ID theft PIN
Interview Notes - adapted from Pub 4491-W
Hannah is a single mother of two children, Tara and Jerry. She showed you three social
security cards with the following numbers:
Hannah E Fleming 241-00-7210
Tara Fleming 242-00-7210
Jerry Fleming 243-00-7210
Hannah is divorced. The divorce decrees states that her ex-husband is to claim their son,
Jerry, as a dependent on his return even though Hannah provides all the support for their
children, Tara and Jerry.
Hannah confirmed that the tax exempt interest she received from Northern Bank was
exempt both federally and in Massachusetts.
In January of the tax year, Hannah took an IRA distribution of $5,000 to pay off credit card
debt. She made no contributions to this IRA while a MA resident.
She did not itemize deductions last year.
Hannah had a serious accident in June of the tax year and stopped working. She collected
unemployment compensation, but was too young to retire. Hannah is now totally and
permanently disabled.
Hannah rents an apartment; her monthly rent was $975. She and the children were
covered by MassHealth for the year.
Part 1
Enter the following:
Basic Information, filing status, and dependents
Income: Wages (W-2), unemployment (1099-G), interest (1099-INT), IRA
distribution (1099-R)
Health care information
Hannah Fleming Fall 2017
6-4
Hannah Fleming Fall 2017
6-5
Hannah Fleming Fall 2017
6-6
Hannah Fleming Fall 2017
6-7
Part 2
Hannah was employed as an editor. Starting on July 1, 2009 she did some editing work
from her home for Candid Publishing Co. who provided form 1099-MISC. She kept a
record of her expenses: $1,625 for paper, $1,047.50 for printer cartridges, $1,250 for
postage, $350 for a business phone line and long distance calls, and total mileage of 234
for January and February for making deliveries. She had 10,000 other miles on her car.
Hannah has one car which she bought in 2007 and began using for her work when she
started working at home. She has a written record of her business mileage. She took a
processing course in the evening at the local college to improve her skills. The tuition was
$575. The Business Code for Schedule C-EZ or C is 541990. The address for the college
was: One University Way, Your City, State and Zip Code.
Hannah’s education expenditures could be a business expense or a credit. Determine the
most advantageous benefit for which she is qualified.
Tara’s divorce decree states that her ex-husband is to pay her $300 per month alimony.
Due to the loss of his job during the year, he only paid for 8 months.
Hannah paid the After School Academy (EIN 24-2111111), located at 54 Unique Way, Your
City, State and ZIP Code, for Tara and Jerry’s after school care while she was at work. She
paid the day-care center $1,794.
Hannah let you know that a couple of years back she experienced an identity theft issue.
She brought with her a copy of the IRS CP01A letter. Her letter shows that she was issued
a PIN of 459871 for use when completing her return.
Enter the following:
Disability payment (1099-R)
Self-employment income (1099-MISC); prepare Schedule C’s (federal and MA)
Alimony received
Dependent care expenses
MA rent
IRS ID theft PIN
Hannah Fleming Fall 2017
6-8
Gail Hudson Fall 2017
7-1
Gail Hudson Fall 2017
7-2
Gail Hudson Fall 2017
7-3
Objectives
Understand and enter data for medical insurance bought on Marketplace
Understand how to account for short term gap in coverage, federal and MA
Understand impact on returns of insurance information
Interview notes – adapted from the NTTC workbook
Learning objective: federal health care exemptions
Gail has recently taken a job as a restaurant manager.
Gail shows you her social security card with number 021-00-7210.
Gail did not have any health insurance with her job and purchased insurance
through the Marketplace in March. She gives you her 1095-A and MA Form 1099-
HC showing an EIN of 12-3456789 and subscriber number of 135792468. She did
have coverage at the end of 2016.
Gail rents her apartment for $1000 per month.
Gail Hudson Fall 2017
7-4
Gail Hudson Fall 2017
7-5
Gail Hudson Fall 2017
7-6
Timothy and Nicole Sterling Fall 2017
8-1
Timothy and Nicole Sterling Fall 2017
8-2
Timothy and Nicole Sterling Fall 2017
8-3
Objectives
Prepare MFJ return for retired couple, one possible dependent, disabilities
No new income types, but pension requires Simplified Method
Enter US Bond interest, stock sales
Determine MA Circuit Breaker for renter
Interview Notes - adapted from Pub 4491-W
Social security cards provided:
Timothy A. Sterling 251-00-7210
Nicole S. Sterling 252-00-7210
Christina Summers 253-00-7210
Timothy and Nicole have been married for over 40 years. Timothy retired from the
International Brotherhood of Electrical Workers on January 1, 2009 and elected to take a
joint and survivor annuity at that time.
Nicole was hit by a car and severely injured. She was granted Social Security Disability as
a result of her injury.
Timothy’s sister, Christina Summers, lived with them all year. She is totally and
permanently disabled and relies upon her brother for her support. She received $250 per
month in social security benefits.
Nicole has less than 20/200 vision in both eyes. She provided a doctor’s statement that
she is legally blind..
They itemized deductions last year, but did not receive any state refund.
Timothy, Nicole, and Christina were on Medicare for the entire year.
Return is partitioned in two parts, second part builds on first.
Part 1
Enter the following: Basic information, filing status, and dependents, Social Security (SSA-
1099); pension (1099-R), interest (1099-INT), dividends (10990DIV), health care
information
Timothy and Nicole Sterling Fall 2017
8-4
Timothy and Nicole Sterling Fall 2017
8-5
Timothy and Nicole Sterling Fall 2017
8-6
Timothy and Nicole Sterling Fall 2017
8-7
Part 2
Timothy and Nicole have been married for over 40 years. Timothy retired from the
International Brotherhood of Electrical Workers on January 1, 2009 and elected to take a
joint and survivor annuity at that time.
Timothy’s brokerage statement shows that he purchased 100 shares of Domestics stock on
March 12, 1984 for $12,000. This is a non-covered security (means the cost basis was not
reported to the IRS). He sold the stock on March 23 of this year. He received $15,000 net
of commissions on the sale.
The Sterlings rent their apartment, paying $1500 per month. Their landlord is Broken
Arrow Realty, 4000 Broken Arrow Way, Your Town, MA Your Zip
Enter the following:
Pension (1099-R) and perform Simplified Method Brokerage statement (1099-B) Rent deduction in MA and determine eligibility for Circuit Breaker
Timothy and Nicole Sterling Fall 2017
8-8
Albert and Lois Meadows Fall 2017
9-1
Albert and Lois Meadows Fall 2017
9-2
Albert and Lois Meadows Fall 2017
9-3
Objectives
Prepare MFJ return for retired couple with son living with them
Enter 1095-A for Marketplace purchased insurance; determine impact on return
Use Simplified Method on pension; handle alimony paid, enter student loan interest
Interview Notes – adapted from the NTTC workbook
Albert and Lois show you the following social security cards:
Albert 125-00-7210
Lois 126-00-7210
Warren 127-00-7210
Lois and Albert have no mortgage and their real estate taxes are not high enough for them
to itemize deductions.
This is a two-part problem.
Part 1
Albert retired on December 1, 2013 after 30 years of service. He is under 65 and not
disabled and does not yet receive social security. His pension was set up as a
joint/survivor.
For Part 1, assume Albert has full-year health insurance from his former employer for the
entire family. Their MA 1099-HC shows their subscriber numbers as 13579-1 (Albert) and
13579-2 (Lois). The EIN for Acme Insurance is 123333333.
Enter the following:
Basic information, filing status, and dependents
Wages (W-2)
Interest (1099-INT) with early withdrawal penalty
Dividends (1099-DIV), with foreign taxes paid
IRA (1099-R). There were no prior contributions made while a MA resident.
Pension (1099-R) – assume it is all taxable
Health care information
Albert and Lois Meadows Fall 2017
9-4
Albert and Lois Meadows Fall 2017
9-5
Albert and Lois Meadows Fall 2017
9-6
Albert and Lois Meadows Fall 2017
9-7
Part 2
Lois attended Woodbury Community College several years ago where she took teaching
certification classes that were necessary for her job. She shows you a 1098E with student
loan interest.
Albert was married previously to Eleanor Meadows 128-00-7210 and he pays her $100.00
a month alimony.
Change health care information to indicate they have insurance purchased from the
Marketplace because Albert turns out is not eligible for health insurance coverage from his
former employer and his wife Lois is not offered insurance at her place of work. Albert
purchased health insurance through the Marketplace for himself, his wife, and his son
several years ago and continued to do so this year. When Albert purchased health
insurance for the family he estimated their household income at $2,000 per month. Their
MA 1099-HC showed their subscriber numbers as 13579-1 (Albert) and 13579-2 (Lois).
EIN is 123333333.
Enter the following:
Adjust amount taxable pension income using simplified method
Enter student loan interest
Enter alimony
Enter 1095A
Albert and Lois Meadows Fall 2017
9-8
Jeremy and Janice Clark Fall 2017
10-1
Jeremy and Janice Clark Fall 2017
10-2
Jeremy and Janice Clark Fall 2017
10-3
Objectives
Prepare MFJ working couple return with two sons as possible dependents
Enter typical income types
Determine impact of spouse having no health insurance – federal and MA penalties
and affordability questions
Interview Notes – adapted from the NTTC workbook
Jeremy and Janice were married two years ago.
Jeremy says he had health insurance that meets MEC through his work for himself and
his two sons Thomas and Sean. Janice was not eligible for health insurance through
her job and did not apply for any marketplace exemptions. Jeremy shows you his MA
1099-HC showing he has Blue Cross Blue Shield insurance, EIN 96-0000061,
subscriber number 123456789.
They currently live with Jeremy’s widowed mother in her home and pay no rent or real
estate taxes. They did not itemize last year and will not itemize this year either.
Jeremy and Janice show you the following social security cards:
Jeremy 051-00-7210
Janice 052-00-7210
Thomas 053-00-7210
Sean 054-00-7210
The calculated MA penalty is $732. To answer the MA affordability questions in
TaxSlayer, use the instructions for MA Sch HC in the Form 1 Instructions. Assume the
Clarks live in region 2.
Jeremy and Janice Clark Fall 2017
10-4
Jeremy and Janice Clark Fall 2017
10-5
Jeremy and Janice Clark Fall 2017
10-6
Mark Austin Fall 2017
11-1
Mark Austin Fall 2017
11-2
Mark Austin Fall 2017
11-3
Objectives
Prepare return for taxpayer, separated from spouse; did not live together
Determine filing status, impact for MA state refund, standard vs itemized deduction
Discuss Railroad Retirement income types and enter data
Determine how to handle prior traditional IRA contributions on MA return
Handle first time homebuyer repayment
Interview Notes – adapted from Pub 4491-W
Social Security numbers provided:
Mark Austin 231-00-7210
Andrea Austin 232-00-7210
Mark and Andrea Austin have been separated since 2015. They have not lived together
since the separation, but their divorce is not finalized. Andrea’s birthday is 6/17/1940.
This is a two-part problem.
Part 1
Andrea has already filed her tax return and she itemized her deductions.
Mark itemized deductions last year and received a refund from the MA department of
revenue for $171. Mark itemized because Andrea did the same. His itemized deductions
total $13,750 his taxable income was $8,549. The amount from last year’s Schedule A, line
5a (income taxes) was $423. His general sales tax was $350.
Mark retired on 15 January 2005 and began taking annuity payments from the Railroad
and now works part-time as a machinist. His annuity does not make provisions for a joint
and survivor annuity.
He had Medicare for minimum essential coverage all year.
Enter the following:
Basic information, filing status, and dependents.
Railroad retirement income (RRB-100/RRB-1099-R)
Wages (W-2)
Dividends (1099-DIV)
IRA (1099-R); assume all is taxable in MA
Health care information
Mark Austin Fall 2017
11-4
Mark Austin Fall 2017
11-5
Mark Austin Fall 2017
11-6
Part 2
Mark contributed a total of $12,000 to his IRA while he was a MA resident and has taken
$1350 since he turned 70 ½.
His church contributions were $1,700 (per statement from the church).
Mark itemized deductions last year and received a refund from the MA department of
revenue for $171. Mark itemized because Andrea did the same. His itemized deductions
total $13,750 his taxable income was $8,549. The amount from last year’s Schedule A, line
5a (income taxes) was $423. His general sales tax was $350.
Mark purchased a new home on April 18. 2008 for $134,000. He received $7,500 for his
First Time Home Buyer Credit. The IRS sent him a CPO3A reminding him about the
repayment of the annual $500 that needs to be included on his tax return. He repaid the
minimum $500 on all tax returns since 2010 and will do the same this year.
He paid $125 in car excise taxes this year.
Mark Austin Fall 2017
11-7
Enter the following:
MA refund
Itemization
First time home buyer credit
Prior IRA contributions in MA
Mark Austin Fall 2017
11-8
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Sean and Stacey Graham Fall 2017
12-1
Sean and Stacey Graham Fall 2017
12-2
Sean and Stacey Graham Fall 2017
12-3
Objectives
Prepare return for MFJ working couple with children and mother
No new income types; itemize deductions with gambling losses
Enter adjustments for student loan interest, paid alimony
Calculate education credits for son and mother
Calculate MA Circuit Breaker Credit and Safe Harbor tax
Enter direct deposit bank information
Interview Notes – adapted from Pub 4491-W and the MA additions by Peter Viles
Social Security cards provided:
Sean Graham 111-00-7210 Stacey Graham 112-00-7210 Jeremy Graham 113-00-7210 Joshua Graham 114-00-7210 Gail Forsyth 115-00-7210
Sean and Stacey Graham are married, have two children living with them, and want to file a joint return. Stacey’s mother, Gail Forsyth, lived with Sean and Stacey for the entire year. Gail’s entire income consists of $2,500 earned as a teacher’s aide, $360 in interest, and $4,200 in Social
Security benefits. Sean and Stacey provided over half of Gail’s total support. She is a US
Citizen and is widowed. Both Sean and Stacy are covered by Blue Cross Blue Shield of MA. The EIN is 96-0000061, subscriber numbers 987654321-1 and -2. Both children are covered under the same policy. Gail had Medicare A and B coverage all year.
This is a three part return.
Part 1
Enter basic information, filing status, and dependents
Enter all income
Enter health care information
Sean and Stacey Graham Fall 2017
12-4
Sean and Stacey Graham Fall 2017
12-5
Sean and Stacey Graham Fall 2017
12-6
Sean and Stacey Graham Fall 2017
12-7
Part 2
Sean and Stacey want to itemize their deductions this year. They provide the following
information with supporting documentation.
Medical insurance premiums – paid by Stacy $3520
Hospital bills, unreimbursed $ 315
Doctor bills, unreimbursed $ 540
Dentist bills, reimbursed by insurance $4200
Antihistamine (over the counter) $ 190
Gail’s prescription drugs (unreimbursed); Stacey paid $ 650
Life insurance premiums $ 385
Insulin (unreimbursed) $ 250
Excise tax on vehicles $ 565
Mortgage interest (paid to Beringer FCU) $5656
Real estate taxes $1300
Credit card interest $ 900
Church contributions paid by check $7550
Union dues $ 875
Safety Deposit Box for investments $ 150
Sean and Stacey Graham Fall 2017
12-8
Sean paid his ex-wife, Elaine, $250 per month, all year, in alimony. Elaine’s SSN is 116-00-
7210. Stacey paid $500 in interest on student loans for her Master of Science Degree in Elementary Education. Sean and Stacey own their own home. In 2015, their home was assessed at $251,000 and their water and sewer charges for the year were $343.17. Stacey does a lot of on-line shopping and wishes to take the Safe Harbor use tax on the MA
return.
Stacey went to Reno Nevada with friends and won $1,000 playing poker. She purchases MA lottery tickets, but had no winnings. She says she incurred $1,500 in gambling losses and says she has a written record to support those losses. Enter the following:
Itemization
Adjustments to income
Safe harbor tax
Circuit breaker
Part 3
If Sean and Stacey are due a refunds, they want the refund deposited directly into their check account at the Local National Bank in their town. If they owe on either Federal or MA returns, they want the amount owed debited. The Local National Bank routing number and checking account number are: 322070239 and 642299, respectively. Jeremy started college and was in his first year. He has not been convicted on any felony crimes. His college, Campbell University, issued a 1098-T for his education costs and scholarship. The Grahams wrote a check for $7,000 to Campbell, which is located at 15 Morgan Drive, Your town, state and zip code. Campbell’s EIN is 04-2222222. Gail paid $800 for a college course at Campbell University to improve her classroom
management skills.
Enter the following:
Education credits/adjustments
Bank information
Charles and Chelsea Rivers Fall 2017
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Objectives
Prepare return for MFJ retired couple with self-employment income, military
pension and out-of-state (PA) government pension
Determine how to handle MA and PA municipal bond interest
Determine how to handle MA short term and long term carryover losses
Enter federal estimated payments and carryover MA refund to current year
Interview Notes – Originally prepared by Bill Long, District 18
Charles Rivers and his wife, Chelsea, are a retired couple who provide you with the
attached Interview Sheet, and Social Security cards whose numbers are 420-00-7210 for
him and 520-00-7210 for her. They also bring paper copies of their prior year US and
Massachusetts tax returns. They have been full-time residents of Massachusetts since
their move from Pennsylvania. They live together, file jointly, and have no dependents.
Part 1
Not much of a gambler, Charles won a lottery prize, on a one-dollar ticket received as a gift
on Father’s Day; he has given you a W-2G reporting this win. He also tells you he lost $50
in slots at a Connecticut casino.
Mr. Rivers also gives you a receipt from UMass Dartmouth, for payment of tuition on
behalf of his grandson, Hudson Rivers, in the amount of $3000.
The Rivers did not itemize deductions on their prior year Federal return and will not do so
this year either.
When you request evidence of health insurance, the Rivers present a pair of
BlueCross/BlueShield cards, showing Federal ID provider 96-0000061, and subscriber
numbers of 123234345A (her) and 123234345B (him); they also lament the cost of this
insurance, $2,500 per year for each of them, hoping they can deduct it on the
Massachusetts return.
Charles says YES to both the Federal and Massachusetts campaign funds, while Chelsea
says NO to both.
Enter the following:
Basic information and filing status
Interest income (1099-INT), dividend income (1099-DIV), gambling income
Pension income (1099-R) from DFAS and Middlesex Savings IRA
Health care information
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Part 2
Mrs. Rivers retired from a long-term teaching career in Pennsylvania. She comments to
you that Pennsylvania does not tax Massachusetts public teachers’ pensions.
Charles’ 1099R from the Middlesex Savings Bank indicates an IRA distribution. You ask
him for some details about the history of that IRA account. He tells you that he has
maintained a record of his contributions and distributions, and he refers to his prior year
Massachusetts Form 1, Schedule X, Line 2 Worksheet. You learn that the total amount of
his contribution to the IRA during his working years was $25,000. In each of the eight
years preceding the current year he had taken distributions of $3000 per year. None of
those distributions qualified as charitable IRA donations. All his contributions to this IRA
were made during the time he has lived and worked in Massachusetts.
Charles worked a few evenings per week during the summer as a gate tender for an
exclusive community in Falmouth. For this part-time effort he received $7500 in wages,
documented in the 1099-MISC that he has given to you. He incurred no reportable
expenses in the performance of this job. Considered a member of the community security
staff, he tells you his job has been coded 561600 on tax returns in prior years.
Enter the following:
Pennsylvania pension
Self-employment income (and schedule C)
Make MA IRA adjustment for prior contributions
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Part 3
The Rivers rent their main and only home, paying $1000 per month to Falmouth
Properties, Incorporated, a non-subsidized apartment complex.
To cover the taxes on this self-employment income, Charles made four estimated tax
payments of $300 each to the IRS, on April 15th, June 15th, September 15th, and
December 15th. From his prior year Massachusetts return, Form 1, Line 46, you learn that
he also applied $100 of his overpayment to his current year Massachusetts estimated tax.
They offer you two 1099-INT statements from their broker at Trusted Investments where
they have a portfolio of municipal bonds. They tell you they are uncertain whether or not
the information is pertinent to their tax return. The statements are for the following:
City of Worcester, Massachusetts, bond interest: $400.00
City of Altoona, Pennsylvania, bond interest: $666.00
In checking the Rivers’ prior year Federal return, you find no indicated capital losses to
carry forward to the current US return. However, looking over the prior year
Massachusetts return, you find these entries:
Schedule B, Line 40, Available short-term losses for carryover: -$283
Schedule D, Line 23, Available long-term losses for carryover: -$444
Enter the following:
Municipal bond interest
Estimated federal tax payments
Carryover MA refund
Carryover MA losses
Rent of $1000/month
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