Petersan Tax
Petersan Tax Return
Teri A Burris
Federal Income Taxes I
ACC 401
Gary Tate
1 April 2013
In order to properly prepare a tax return, there should be a complete list of the correct documentation in order to facilitate In this case Harold and Sarah Petersan; the forms will be a varied depending on their information. Harold and Sarah Petersan is a married couple living in California, with one dependant. Both husband and wife work outside the home and the dependant received child care services. During the tax year, 2010, the Petersan’s sold their primary residence for $520,000.A line by line review of the Petersan’s tax return will show the appropriate treatment of income, deductions, child care expense and the sale of a primary residence.
The first step is to determine the taxpayers filing status and then which is the appropriate form to use in the preparation of the tax return. According to the Internal Revenue Service, the filing status used is that which is determining on the last day of the tax year. (Internal Revenue Service, 2012)The Petersan’s filing status will be married filing jointly and because they have a dependent child with child care expenses and they sold their primary residence, they will need to file a 1040 form, a form 2441, a Schedule A for itemization of their deductions.
Their daughter does meet all five of the tests in order to qualify as a dependent child. These tests are the relationship test in which she is their daughter or step-daughter or adopted daughter, the age test because she is under 19, the residency test because she lives with her parents all year and the support test because she did not contribute 50% or more of her own support. (Cruz, 2012)So they are able to claim credit for child care expenses and they are entitled to a child tax credit. Of the child care cost of $10, 320, the Petersan’s are only allowed to claim a certain percentage based on
Teri A Burris
Federal Income Taxes I
ACC 401
Gary Tate
1 April 2013
In order to properly prepare a tax return, there should be a complete list of the correct documentation in order to facilitate In this case Harold and Sarah Petersan; the forms will be a varied depending on their information. Harold and Sarah Petersan is a married couple living in California, with one dependant. Both husband and wife work outside the home and the dependant received child care services. During the tax year, 2010, the Petersan’s sold their primary residence for $520,000.A line by line review of the Petersan’s tax return will show the appropriate treatment of income, deductions, child care expense and the sale of a primary residence.
The first step is to determine the taxpayers filing status and then which is the appropriate form to use in the preparation of the tax return. According to the Internal Revenue Service, the filing status used is that which is determining on the last day of the tax year. (Internal Revenue Service, 2012)The Petersan’s filing status will be married filing jointly and because they have a dependent child with child care expenses and they sold their primary residence, they will need to file a 1040 form, a form 2441, a Schedule A for itemization of their deductions.
Their daughter does meet all five of the tests in order to qualify as a dependent child. These tests are the relationship test in which she is their daughter or step-daughter or adopted daughter, the age test because she is under 19, the residency test because she lives with her parents all year and the support test because she did not contribute 50% or more of her own support. (Cruz, 2012)So they are able to claim credit for child care expenses and they are entitled to a child tax credit. Of the child care cost of $10, 320, the Petersan’s are only allowed to claim a certain percentage based on