Tax Planning

ACC 330 Client Tax Profiles B Description 2 Clients for Tax Planning Scenario – Set 1 Schedule C and estimated Tax Payments 2 Tax Planning Scenario 1 3 Clients for Tax Planning Scenario – Set 2 Education Credits 3 Tax Planning Scenario 2 4 Clients for Tax Planning Scenario – Set 3 MFS Standard versus Itemized Deductions 4 Tax Planning Scenario 3 5 Clients for Tax Planning Scenario – Set 4 IRA Contributions 6 Tax Planning Scenario 4 7 Clients for Tax Planning Scenario – Set 5 Bunching Deductions 7 Tax Planning Scenario 5 8

ACC 330 Client Tax Profiles B Description
Note: There are five sets of client data contained in this Client Tax Profile document. Each set represents a category within tax planning, such as Set 2 Education Credits. To show how each category may be applied to clients, there are two client profiles within each category that provide different tax scenarios. This allows you to compare two client scenarios withing a single category of tax planning. The words category and scenario are used interchangeably in this assignment.

Important: This profile collection will be used in Module Six Case Study and will focus on a single category for Project Two in Module Seven.

Review each of these scenarios completely by opening their corresponding Form 1040 tax returns. They are linked to the client profile. These clients have each asked for ways to reduce their tax liability.

Clients for Tax Planning Scenario – Set 1 Schedule C and estimated Tax Payments
Tax Planning Scenario – Schedule C and Estimated Tax Payments

Client(s) #1

Client(s) #2

Open Client 1040

1142

Open Client 1040

1143

Primary Taxpayer’s Legal Name

Joanna Roman

Primary Taxpayer’s Legal Name

Malik Ali

Primary Taxpayer’s Preferred Pronoun

She

Primary Taxpayer’s Preferred Pronoun

He

SSN

***-**-1142

SSN

***-**-1143

Age

25

Age

71

Occupation

Gig Worker

Occupation

Gig Worker

Citizen/U.S. Resident Status

U.S. Permanent Resident

Citizen/U.S. Resident Status

U.S. Citizen

Languages

English; Italian

Languages

English

Marital Status

Single

Marital Status

Single

Spouse’s Legal Name

N/A

Spouse’s Legal Name

N/A

Spouse’s Preferred Pronoun

N/A

Spouse’s Preferred Pronoun

N/A

Spouse’s SSN

N/A

Spouse’s SSN

N/A

Spouse’s Age

N/A

Spouse’s Age

N/A

Spouse’s Occupation

N/A

Spouse’s Occupation

N/A

Dependent(s) (# – Relationship) (Name/Age/SSN)

N/A

Dependent(s) (# – Relationship) (Name/Age/SSN)

N/A

Additional information:

Additional information:

· Joanna is a designer who makes one-of-a-kind clothing. She sells her designs on Etsy, at local consignment shops, and at festivals.

· Her pieces are handmade and only made once. She does not repeat designs, so all pieces are original. She does not maintain any inventory.

· This was the first year that Joanna made a profit, as sales increased tremendously after her social media pages grew more popular.

· She has been tracking her expenses using a spreadsheet and has spent time researching items she can deduct as business expenses, but because she was so busy, she thinks that she forgot to track some expenses that would be deductible for future years.

· Malik retired three years ago and has been collecting Social Security and taking required minimum distributions from his retirement account with Fidelity.

· He paid $1,785 in Medicare premiums and $255 for Part D premiums (prescription drug plan).

· He recently started driving for Uber. He has found he enjoys talking to his customers and driving around his town when he has time to spare.

· He reported income earned from driving for Uber and the related mileage expense that is tracked in the app.

· He added a few additional expenses that he incurred as well.

· When he was fully retired, he only reported his retirement income and was sometimes not required to file. He noticed that he is now required to file to report this part-time income and owed taxes.

Tax Planning Scenario 1
These clients have each asked for ways to reduce their tax liability and are interested in knowing what additional deductions they can take to reduce their net income earned from their self-employed income. They are also wondering if they should make estimated tax payments because they read that if they continue to owe taxes each year that they might be subject to penalties.

Clients for Tax Planning Scenario – Set 2 Education Credits
Tax Planning Scenario – Education credits

Client(s) #1

Client(s) #2

Open Client 1040

1129

Open Client 1040

1132

Primary Taxpayer’s Legal Name

Trilby Keller

Primary Taxpayer’s Legal Name

Robert James

Primary Taxpayer’s Preferred Pronoun

She

Primary Taxpayer’s Preferred Pronoun

He

SSN

***-**-1129

SSN

***-**-1132

Age

47

Age

48

Occupation

Accounting Manager

Occupation

Psychologist

Citizen/U.S. Resident Status

U.S. Citizen

Citizen/U.S. Resident Status

U.S. Citizen

Languages

English

Languages

English

Marital Status

Married

Marital Status

Married

Spouse’s Legal Name

David Keller

Spouse’s Legal Name

Nora James

Spouse’s Preferred Pronoun

He

Spouse’s Preferred Pronoun

She

Spouse’s SSN

***-**-1130

Spouse’s SSN

***-**-1133

Spouse’s Age

53

Spouse’s Age

48

Spouse’s Occupation

Bookstore manager

Spouse’s Occupation

Office Manager

Dependent(s) (# – Relationship) (Name/Age/SSN)

1 – Son; Wyatt Keller (Age 22) (***-**-1131)

Dependent(s) (# – Relationship) (Name/Age/SSN)

2 – Sons; Kris James (Age 18) (***-**-1134); Nolan James (Age 18) (***-**-1135)

Additional information:

Additional information:

· This year was Wyatt’s fourth year in college.

· Next year, he is considering moving onto his master’s degree. The Kellers have claimed the American Opportunity Credit for Wyatt for four years.

· The Kellers anticipate paying Wyatt’s qualified education expenses towards his master’s degree program next year.

· Wyatt will remain a full-time student and the Kellers provide full support to Wyatt while he is enrolled in school.

· Kris and Nolan are twins who will begin attending the local community college in the Fall.

· The James’s plan is to support both children financially through the next four years while attending school.

· They have already started to accumulate expenses as they prepare to send both children off to school, such as application fees, new computers, and repairs to their cars to make sure they will not encounter issues with car troubles while away at school.

Tax Planning Scenario 2
These clients are each concerned with reducing their tax liability and are interested in knowing what amount of education tax credits will be available to them for their college-age children next tax year.

Clients for Tax Planning Scenario – Set 3 MFS Standard Versus Itemized Deductions
Tax Planning Scenario – MFS Standard Deduction Versus Itemized Deductions

Client(s) #1

Client(s) #2

Open Client 1040

1136

Open Client 1040

1137

Primary Taxpayer’s Legal Name

Kai Lee

Primary Taxpayer’s Legal Name

Albert Lee

Primary Taxpayer’s Preferred Pronoun

She

Primary Taxpayer’s Preferred Pronoun

He

SSN

***-**-1136

SSN

***-**-1137

Age

63

Age

64

Occupation

Bank Manager

Occupation

Inventory Manager

Citizen / U.S. Resident Status

U.S. Citizen

Citizen / U.S. Resident Status

U.S. Citizen

Languages

English; Thai

Languages

English / Thai

Marital Status

Married

Marital Status

Married

Spouse’s Legal Name

Albert Lee

Spouse’s Legal Name

Kai Lee

Spouse’s Preferred Pronoun

He

Spouse’s Preferred Pronoun

She

Spouse’s SSN

***-**-1137

Spouse’s SSN

***-**-1136

Spouse’s Age

64

Spouse’s Age

63

Spouse’s Occupation

Inventory Manager

Spouse’s Occupation

Bank Manager

Dependent(s) (# – Relationship) (Name/Age/SSN)

N/A

Dependent(s) (# – Relationship) (Name/Age/SSN)

N/A

Additional information:

Additional information:

· Kai and Albert are married but separated at this time. They remain cordial and plan to stay married for now, filing separately for the next few years.

· Kai is living with her sister and does not own any property other than the home previously shared with Albert. Kai no longer contributes to the expenses required to maintain their home.

· Kai does not anticipate any changes to her current income or deductions.

· Filing separately, Albert took itemized deductions, which caused Kai to have to do the same in the same tax year.

· Kai and Albert are married but separated at this time. They remain cordial and plan to stay married for now, filing separately for the next few years.

· Albert has incurred additional medical expenses in recent years.

· Albert retained ownership of the home he and Kai shared and is paying the mortgage and real estate taxes.

· Albert anticipates the same expenses to be incurred next tax year and no changes to his current income.

Tax Planning Scenario 3
These clients have asked whether they should take the Standard Deduction or itemize their deductions next year to save more tax collectively. They are curious about whether they can continue filing separately even though they are still married and what the downfalls of filing separately might include.

Clients for Tax Planning Scenario – Set 4 IRA Contributions
Tax Planning Scenario – IRA Contributions

Client(s) #1

Client(s) #2

Open Client 1040

1138

Open Client 1040

1139

Primary Taxpayer’s Legal Name

Carlos Quintero

Primary Taxpayer’s Legal Name

Daniel Hoffman

Primary Taxpayer’s Preferred Pronoun

They/Them

Primary Taxpayer’s Preferred Pronoun

He

SSN

***-**-1138

SSN

***-**-1139

Age

41

Age

39

Occupation

Dentist

Occupation

Firefighter

Citizen/U.S. Resident Status

U.S. Citizen

Citizen/U.S. Resident Status

U.S. Citizen

Languages

English; Spanish

Languages

English

Marital Status

Single

Marital Status

Married

Spouse’s Legal Name

N/A

Spouse’s Legal Name

Jacinta Hoffman

Spouse’s Preferred Pronoun

N/A

Spouse’s Preferred Pronoun

She

Spouse’s SSN

N/A

Spouse’s SSN

***-**-1140

Spouse’s Age

N/A

Spouse’s Age

43

Spouse’s Occupation

N/A

Spouse’s Occupation

Art Gallery Manager

Dependent(s) (# – Relationship) (Name/Age/SSN)

N/A

Dependent(s) (# – Relationship) (Name/Age/SSN)

1 – Daughter; Cristina Hoffman (Age 8) (***-**-1141)

Additional information:

Additional information:

· Carlos moved to Alaska to assist in an upcoming dental office that is servicing the local community.

· They agreed to take a reduced salary for the initial year but anticipates nearly doubling his salary in the years ahead.

· Their current employer does not offer any retirement benefits, so they contributed $6,000 to a traditional IRA this year.

· Their employer told him they plan to start offering a 401(k) next year. Carlos wishes to contribute $6,000 to his traditional IRA next year.

· Daniel works full time as a firefighter for the local fire department.

· He also has a side business conducting obedience training for dogs. His employer offers full benefits, such as healthcare, retirement, and vacation time off.

· Jacinta’s employer does not offer any employee benefits. She would like to contribute more to her existing retirement account, a traditional IRA she established at her former employer.

· Jacinta also plans to reduce her hours at the art gallery to part time.

· Next year, Cristina will no longer be attending the daycare center as Jacinta will be working part-time so no childcare expenses will be incurred.

Tax Planning Scenario 4
These clients have each asked for ways to reduce their tax liability and are interested in knowing whether contributions to a traditional IRA would be tax deductible.

Clients for Tax Planning Scenario – Set 5 Bunching Deductions
Tax Planning Scenario – Bunching Itemized Deductions

Client(s) #1

Client(s) #2

Open Client 1040

1124

Open Client 1040

1125

Primary Taxpayer’s Legal Name

Tavaris Johnson

Primary Taxpayer’s Legal Name

Juliana Romero

Primary Taxpayer’s Preferred Pronoun

He

Primary Taxpayer’s Preferred Pronoun

She

SSN

***-**-1124

SSN

***-**-1125

Age

38

Age

62

Occupation

Steel Mill Worker

Occupation

Part-time Bookkeeper

Citizen/U.S. Resident Status

U.S. Citizen

Citizen/U.S. Resident Status

U.S. Citizen

Languages

English

Languages

English, Italian

Marital Status

Single

Marital Status

Single

Spouse’s Legal Name

N/A

Spouse’s Legal Name

N/A

Spouse’s Preferred Pronoun

N/A

Spouse’s Preferred Pronoun

N/A

Spouse’s SSN

N/A

Spouse’s SSN

N/A

Spouse’s Age

N/A

Spouse’s Age

N/A

Spouse’s Occupation

N/A

Spouse’s Occupation

N/A

Dependent(s) (# – Relationship) (Name/Age/SSN)

N/A

Dependent(s) (# – Relationship) (Name/Age/SSN)

N/A

Additional information:

Additional information:

· Tavaris donated $4,500 in charitable contributions last year but noticed they were not listed on the current year tax return.

· He plans to contribute the same amount in charitable contributions next year but considered donating two years of his typical donation in the same tax year to help reduce his tax liability.

· He expects no other changes to his income sources or deductions.

· Juliana donated $3,500 in charitable contributions last year.

· She mentioned that she typically pays her annual charitable contribution in December of the year.

· She was interested in paying next year’s contribution early and is considering sending in two annual contributions in the same tax year.

· Juliana also shared with you that she will be incurring the following additional medical expenses next year:

· Doctor co-pay: $40 per visit (once per week)

· Dental procedures expected: $750 (quote received)

· Prescriptions: $175 per month

· Over-the-counter supplements: $1,250

· Makeup and toiletries: $600

· Insurance premium for additional vision plan: $20 a year

· Spa visit: $120

· Hospital bills (payment plan): $250 per month ($3,000 total)

· Mileage: Her doctor’s office is 15 miles from her home one way.

Tax Planning Scenario 5
These clients have each asked for ways to reduce their tax liability and are interested in knowing if they would benefit from bunching their itemized deductions into one tax year.