Test Return #4

[Bees Knees]

There is no poll for this one. This one should be easy. Post your answer for all of us to see.

Bob (age 38) and Betty (age 34) are married, filing a joint return for 2008. They do not own their home.

They have custody of their two children, Matthew (age 5) and Jenny (age 3).

Bob’s W-2 has the following entries:

Box 1 = $67,250.00
Box 2 = $6,550.00
Box 3 = $67,250.00
Box 4 = $4,169.50
Box 5 = $67,250.00
Box 6 = $975.13

Betty’s W-2 has the following entries:

Box 1 = $3,500.00
Box 2 = $0.00
Box 3 = $3,500.00
Box 4 = $217.00
Box 5 = $3,500.00
Box 6 = $50.75

Betty works her part time job in the evenings after Bob comes home from work to watch the kids.

They also pay a 19-year old neighbor girl named Kathy to come over to their house from time to time to watch the kids during evenings and weekends when Bob and Betty decide to go out to eat and for other social events. Kathy is a full time student working her way through college by performing baby sitting jobs for family and friends in the neighborhood, as well as working part time at the local McDonald’s.

Assume that at the time you interviewed Bob and Betty to prepare their 2008 return, you asked them to get Kathy’s address and social security number, along with the dollar amount they paid to Kathy during the year. Bob and Betty then asked Kathy for that information, and she willingly gave it to them. Bob and Betty then provided you with that information, along with the following cash payments they gave to Kathy for her babysitting services:

1/15/2008 = $75
2/1/2008 = $90
2/13/2008 = $75
3/11/2008 = $90
3/21/2008 = $60
3/28/2008 = $90
4/14/2008 = $75
4/20/2008 = $75
4/28/2008 = $90
5/21/2008 = $180
6/2/2008 = $60
6/13/2008 = $75
7/4/2008 = $90
7/13/2008 = $60
7/27/2008 = $75
8/15/2008 = $75
9/1/2008 = $90
9/7/2008 = $75
10/3/2008 = $90
10/12/2008 = $90
10/31/2008 = $90
11/7/2008 = $60
11/15/2008 = $60
12/21/2008 = $180

Assume Bob and Betty do not itemize deductions. Assume there is no other information that would affect their federal tax return.

What is Bob and Betty’s refund / balance due on thier federal Form 1040?

[Bees Knees]

P.S.

Post your answer, but do not give away anything. I'll give you the answer and explanation sometime this weekend.

[S T]

2007

Received their Stimulus Rebate on the 2007 return, so not a factor?

Sandy

[Brian EA]

Without the rebate the refund is $ 2471.

OK Bees; I changed the refund to 2154 after putting on my thinking cap


brian.

[JG EA]

Without the rebate the refund is $ 2471. With the rebate the refund is $4271

brian

Agree: $2471 without rebate.

There's got to be a trick here.
______
I wish to change my answer to $2154.

[S T]

Well

I also have those numbers, but not going to post yet, as I do think there is a trick - so reviewing.

Bees never gives us anything this simple So off to TTB and the Pubs, sigh!

S

[PIGLEE]

I came up with a refund of $2,130.00 without the rebate. I am either wrong or the first one with the correct answer, because I am different than anyone else so far. One other comment I am glad I don't have to pay babysitters today, far more than the 25cents an hour I earned. I discovered that I could make more money in tips keeping score for bowling alley leagues, when the scoring was all done by hand.

[Bees Knees]

Assume there is no other information that would affect their federal tax return.

If they were due a recovery rebate credit, that information would affect their federal tax return. Thus, you have to assume that the recovery rebate credit is a non-issue and does not apply.

[Bees Knees]

Bees never gives us anything this simple So off to TTB and the Pubs, sigh!

Maybe I know you know I never give you anthing this simple, so I am giving you something this simple just to throw everyone off.

Or maybe not...

[S T]

Yes I thought of that

Bees,

Yes, I thought of both scenarios, so this is a test of our skills and understanding, I don't mind doing the homework to check on to make sure before I post my final answer. You definintely are posting issues to make us think and review "each and every return that we encounter" instead of just letting our software based on what we input?

I think most of us in the business after 10- 20+ years have gotten "lazy" and rely on software.

Case in point, I didn't bother to check calculations on a form in Calif - Underpayment of ES taxes - and guess what my software was wrong for 2008 tax returns - so now I am living with the repercussion of those mistakes - fortunately only 1 or 2.

Guess we need to check all forms

Okay back to my reviewing TTB and the Pubs on Test 4

Sandy

[nalawson]

I also got $2471 refund.
Nancy

[Snaggletooth]

My answer

...is that they have a refund of $2154. Anxious to see how this one comes out...

[CinSee]

My answer is....

also $2,154.

I have been on vacation so I missed the earlier tests. This was a great idea!

Thanks!

[MRTAX4EA]

Returns Have Been Interesting

I calculated $2,471 also!

[dkss]

Thanks for these tests Bees

I figured a refund of $2471.

I have really enjoyed these tests!

Debbie