ACC 350 4-3 - Rumrill

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Southern New Hampshire University *

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350

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Accounting

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Feb 20, 2024

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Unique Circumstances Assignment Ashlynn Rumrill Southern New Hampshire University ACC 350: Volunteer Income Tax Assistance Professor Victoria Kaskey February 4, 2024

Summarize Tax Scenario A Advanced Scenario 3: Rose Jones Rose Jones is 57 years old, a U.S citizen with a valid SSN, and single with earned wages of $52,000. She was enrolled in a high deductible health plan the entire year and had a Health Savings Account to which she contributed $2,000 and her mother $1,000. This Health Savings Account is what makes this taxpayers scenario unique. Rose took a distribution from this Health Savings Account to pay for the following unreimbursed medical expenses: $400 for physical therapy after knee surgery, $240 gym membership, $1,100 in doctor bills, $280 in prescription medication, $40 in over-the-counter medication, $300 deep cleaning for teeth, and a $1,500 crown replacement. Rose has a W-2 with $850 in Box 12 and a code W. She also has a 5498-SA form with $3,850 in Box 2. Analysis Tax Scenario A The scenario summary gives the information for the filing status page of the 1040, income and expenses. The instructions for Form 8889 under frequently asked questions and publication 502 show which of Rose’s medical expenses would qualify for a deduction. Further information required to determine which deductions Rose is eligible for may include more details on the medical expenses she listed. For instance, $1,100 in doctor bills is vague, physical exams are a medical expense that can be reimbursed as well as hospital services. Prescription medication, physical therapy and dental work in diagnosing or treating dental diseases such as deep cleaning and crown replacement. The $240 gym membership may qualify for a tax deduction if the membership was bought with the sole purpose of treating a disease or following a prescribed physical therapy plan for her knee after surgery. This may require more research to

determine if the gym membership is eligible for a deduction. Nonprescription medications are the only expenses listed that cannot be included in medical expenses for Rose. Information about Health Savings Accounts can be found in Publication 4012 on page E- 10 through E-14 under Health Saving Accounts (HSA). This section also gives information on qualifying medical expenses, criteria for qualifying to fill out the 8889 form and how to fill out the 8889 form. Summarize Tax Scenario B Advanced Scenario 6: Mike Cooper Mike Cooper is 26 years old, is a U.S citizen with a valid SSN, is single and fully supports himself. Mike earned $15,250 over the year while working at a grocery store. He also took two management college courses at a community college to improve job skills but was not a full-time student. Analysis Tax Scenario B Scenario B is missing some information that could help complete a tax return. The name and address of the community college Mike took the courses at and the price he paid for those classes will be needed. It would also be good to know if he paid for those courses out of pocket, through student loans or otherwise. If Mike received a 1098-T form from the college that would also be a necessary, document to accurately file his tax return. To qualify for an education credit, the law requires that Mike needs to have received a 1098-T from the college he attended. If he did not receive a 1098-T then he may be able to use the school's EIN to qualify for the Lifetime Learning Credit.

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Education tax benefit/credit information can be found on publication 4012 on pages J-5 through J-13, titles Highlights of Education Tax Benefits for Tax Year 2023, Education Credits, Determining Qualified Education Expenses, and Entering Education Credits. Tab 1 of publication 4012 titled Earned Income Credit shows eligibility requirements for the credit without a qualifying child. Mike is eligible for the credit due to low income and meets all four requirements, he is at least 25 but younger than 65, is not claimed as a dependent or qualifying child of another taxpayer and lived in the U.S more than half the year. Research Approach When researching taxpayer information, the first step is to thoroughly go through and examine and sort out the basic information given. From there you can see where you need to go from, where it seems like information is missing and what information seems unclear. With the basic information I went through the steps of what could be imputed when creating a tax return, where and what required information is left to fill out. After going through the information that would be needed for filing information and wages, whatever is left, I assume will need a little more research to properly be filed. Then I went through the publication 4012 looking for the basic topic in the table of contents, like if they went to college go to education credits, if they have children, dependent credits, etc. From there using details given by the taxpayer I can look at what specific forms are needed, what they qualify for and if I cannot figure it out from that either more detailed information from the taxpayer or more research is needed.

References IRS. (n.d.). Instructions for form 8889 (2023) . Internal Revenue Service. https://www.irs.gov/instructions/i8889 IRS. (2023f). VITA/TCE Volunteer Resource Guide 4012. https://www.irs.gov/pub/irs-pdf/p4012.pdf#page=44 IRS. (2023c). Supplement 4491-X (rev. 1-2022) - internal revenue service. https://www.irs.gov/pub/irs- pdf/p4491x.pdf IRS. (2023b). 2023 publication 502. https://www.irs.gov/pub/irs-pdf/p502.pdf