| Volunteer Says… |
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Daniela Responds… |
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| Daniela, we've totaled your income, so we can go on to Adjustments to Income. We might find ways to reduce the income that you're taxed on. Do you have questions before we go on? |
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No, it all makes sense. |
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| Now, let's review the expenses listed on your intake and interview sheet and the deductions listed in the Adjustments to Income section of Form 1040, Schedule 1. Do you have a Health Savings Account? |
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No, I don't. |
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| Okay. That brings us to self-employment tax. As you can see, the tax software has calculated the deductible portion of your self-employment tax and shows it here as an adjustment to income. The same with the penalty for an early withdrawal, right? Since I put that in when I entered your interest income, it already shows up as an adjustment. |
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Cool! |
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| Did you pay any alimony? |
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No, I've never even been married. |
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| Did you pay any health insurance premiums during the year? Now, did you contribute to an IRA? |
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No. I put in $2,000 right after Christmas. |
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| Good for you. You can contribute up to $7,000 this year—will you be contributing anymore? You can put money in your IRA before the deadline for filing the return. |
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I don't think so, but that's good to know. |
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| Was it a traditional, Roth IRA or a SIMPLE IRA? |
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It was just a plain old IRA. Here's the statement. |
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| There we go; it is what we call a traditional IRA. There is no age limit. Were you covered by any kind of employer retirement plan at any time during the tax year? |
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No, none. |
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| Because you weren't covered by a retirement plan, you will be able to deduct the full $2,000 you contributed.
[The volunteer reviews all expenses listed on the intake and interview sheet and moves down each line of the Adjustments section of Form 1040, Schedule 1, asks more questions and determines that Daniela does not qualify for the remaining adjustments.] |
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| We've entered all the adjustments that apply to you. Here is your total income…here are your total adjustments…and here is what we call your Adjusted Gross Income, that will carry over to the second page of the return where we will determine your deductions. |
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That's great! This program makes it really easy! |
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| [On the intake and interview sheet, note that you have addressed this adjustment.] |
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