Tax Return

Please complete a 2022 Form 1040 and accompanying forms and schedules for

Matteo using 2022 forms:

Matteo Franco is not married and supports their 12-year-old child who lives with them. Matteo works as a self-employed driver with gross revenue of $69,700 and business expenses of $11,400 (make-up the classification of the expenses, e.g.

supplies). Matteo’s only other income was interest of $2,300, qualifying dividends of $2,150, and other information follows

Contribution to solo Section 401(k) retirement plan $ 3,900

Loss on sale of Alphatech stock held 2 years -3,100

Mortgage interest on primary residence 9,950

State and local property tax on residence 5,350

Property tax included in personal auto registration 260

State sales taxes paid 370

State income taxes paid 1,450

Charitable contributions of cash 1,750

Political contributions 550

Three comments that might help:

 Qualified dividends are included in ordinary dividends on the form 1040.

 You are not required to complete the Schedule D Worksheet. Just consult the last example in “drnos Capital Gain calcs 2023.ppt” to calculate the tax.

 Claim the QBI deduction on the appropriate line of the Form 1040, but no additional form is required.

Use the 2022 tax forms. Use 2023 tax rates and standard deduction, if applicable. The forms can be found here:

https://www.irs.gov/pub/irs-pdf/f1040.pdf

https://www.irs.gov/pub/irs-pdf/f1040s1.pdf

https://www.irs.gov/pub/irs-pdf/f1040sa.pdf

https://www.irs.gov/pub/irs-pdf/f1040sd.pdf

https://www.irs.gov/pub/irs-pdf/f1040sse.pdf

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

These are fillable forms, so you can fill them in online, print them and write them out, or use tax preparation software. Once complete, print them and submit on paper in class.

Question I asked: Since the dividends would not be taxed at ordinary rates, should the tax be record in Schedule 2 under “Any other taxes” and listed in Line 23 of Form 1040? Or should the tax on dividends just be added to the tax on ordinary income and simply listed on Line 16 of Form 1040?

Answer: The latter.

The income tax on the for of the Form 1040 includes the ordinary tax and the capital gains/dividends tax without any explanation.

Technically, you would complete the worksheet at the end of the instructions to Schedule D (

https://www.irs.gov/instructions/i1040sdLinks

to an external site.), which is unbelievably complex for a simple calculation. Don’t do that! Just take, as you suggest, the:

Tax on ordinary income,

Add: tax on dividends at capital gains rate,

Equals: Income tax on Line 23.