Tax Return Problem Derek Zoolander is a widower whose wife M

Tax Return Problem

Derek Zoolander is a widower whose wife, Matilda, died on October 16, 2014. He lives at 4801 Apple Lane, Saginaw, MI 48601. He is employed as a model. During 2016, he had the following receipts:

Salary

$92,000

Interest income-

Checking account at Community Bank

300

Savings account at Community Bank

1,100

City of Saginaw bonds

3,000

4,400

Inheritance from Hansel

50,000

Life insurance proceeds

200,000

Federal income tax refund from 2015 tax return

700

Derek inherited $50,000 of securities from his friend Hansel who died in 2016. He also was the designated beneficiary of an insurance policy on Hansel’s life. The proceeds were $200,000.

Derek’s expenditures in 2016 include:

State income tax paid (includes withholdings during 2016)

$3,200

Home mortgage interest paid to Community Bank

4,700

Contribution to traditional IRA

5,000

Property taxes on home

4,000

Funeral expenses for Hansel

6,000

Charitable contributions to church

3,800

Medical expenses (including $10,000 for dental)

$11,500

Derek and his dependents are covered by his employer’s health insurance policy for all of 2016. However, he is subject to a deductible and dental care is not included. The $10,000 for dental is for Harriet’s dentures. Harriet is Derek’s widowed mother, who lives with him (see below).

Derek’s household, all of whom he supports 100%, includes the following:

Social Security Number

Birth Date

Derek Zoolander

123-45-6787

08/30/1968

Harriet Zoolander (Derek’s mother)

123-45-6780

01/13/1946

Derek Zoolander, Jr. (Derek’s son)

123-45-6783

07/18/1991

Scrappy Zoolander (Derek’s nephew)

123-45-6784

02/16/1996

Harriet passed away on February 1, 2016. For the past few years, Harriet qualified as a dependent of Derek’s. Scrappy is a full-time student in a coal-mining school and earns $4,500 as an intern. Derek Jr. does not work and is engaged to be married.

Federal income tax of $5,600 was withheld from his wages. If Derek has any overpayment on his income tax, he wants the refund sent to him. He does not wish to contribute to the Presidential Election Campaign.

Complete Derek’s 2016 Federal income tax return and necessary schedules using the fillable forms, you will need Form 1040 and Schedule A. Anything not mentioned can be skipped over in the forms.

Salary		$92,000
Interest income-
Checking account at Community Bank	300
Savings account at Community Bank	1,100
City of Saginaw bonds	3,000	4,400
Inheritance from Hansel		50,000
Life insurance proceeds		200,000
Federal income tax refund from 2015 tax return		700

Solution

Harriet passed away on February 1, 2016. For the past few years, Harriet qualified as a dependent of Derek’s. Scrappy is a full-time student in a coal-mining school and earns $4,500 as an intern. Derek Jr. does not work and is engaged to be married.

Federal income tax of $5,600 was withheld from his wages. If Derek has any overpayment on his income tax, he wants the refund sent to him. He does not wish to contribute to the Presidential Election Campaign.

Complete Derek’s 2016 Federal income tax return and necessary schedules using the fillable forms, you will need Form 1040 and Schedule A. Anything not mentioned can be skipped over in the forms.

YES