Timothy Taxpayer (SSN XXX-XX-XXXX) comes to you to have his return prepared. he provides you with his w-2, 1099’s received during the year. timothy is an accountant by day and a personal trainer by night at a local gym. he receives a w-2 from his accounting job but he is self-employed at a local gym doing the athletic training. tim is paid directly by some of his clients and others pay through the gym which will then pay tim. at the end of the year, tim is issued a 1099 for all of the money that he was paid from the gym. Other information might be important:


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    •  tim is single and lives at 56393 van dyke ave sterling heights, mi 48313. he paid property tax of $ 2,900 during 2013.


    • tim has a 12 year old daughter, Sarah Taxpayer (ssn XXX-XX-XXXX) who lives with him in the summers and with his ex-wife during the school year. tim provides child support for sarah which is approximately 75% of sarah’s support during the year.


    • tim has an uncle, James Taxpayer, (ssn XXX-XX-XXXX) who is 54 that lived with him for the whole year. the uncle did not earn any money during the year and tim was forced to pay for all of the expenses for james throughout the year. 


    •  tim earned $90,000 from his accounting job and had $12,000 of federal income tax withheld and $3,500 state income tax withheld. 


    • tim paid state income tax of $1,000 on 3/19/2013 for the prior year’s balance taxes.


    • tim received a gift from his father, Frank Taxpayer, during the year of $30,000 but he does not know how to report it. Frank had to pay gift tax on the gift of $5,000.


    • tim sold 100 shares of XYZ, Inc stock for $3,000 on 10/12/2013. tim had bought 100 shares on 1/1/2009 for $1,000. 100 more on 1/1/2011 for $2,500, and 100 more on 1/1/2013 for $3,000. he did not tell his broker which shares to sell.


    • tim owns a 10% interest in a party store owned as a partnership that he does not participate in. some other family members own the other 90%. the party store lost $12,000 of which tim’s percentage is $1,200.


    • as a result of their divorce agreement, tim had to pay alimony to Beth Former, his ex-wife of $ 30,000. (SSN XXX-XX-XXXX)


    • tim has a rental property atXXXXX biloxi, MS 39530 that he rents all year long. the property was rented to one tenant for the entire year. this was a long term lease. he has income and expenses associated with the property as follows: rental income $10,000 lawn maintenance $600 advertising $125 insurance $2,500 repairs 0 property taxes ,300 mortgage interest $7,000


    • the personal trainer business was started by tim 5 years ago. it is ultra-competitive and he is not the only trainer at the gym so he has to really try and get new clients. tim has the following income and expenses: 1) money directly from clients $15,000 2) tim received a 1099 from the gym for $50,000 facility use fee (for using the gym) 3) $4,000 money paid to a front desk clerk to get new clients to tim. the gym’s owner does not know tim pays this fee and would not approve the fee. the fee bypasses the standard procedure which is to assign on a rotational basis all requests for trainers $2,000. 4) mileage from tim’s accounting job to his personal training job. he has appointments right away so he goes directly from one to the other. 6,000 miles driven. 5) some miscellaneous supplies that were ordinary and necessary $350. 6) the gym that tim does his personal training business out of was on the verge of closing. they did not have money to meet payroll which would have meant that it would have closed soon. tim loaned the gym $10,000 of which he was paid back $5,000. the rest of money will not be collected because the gym owner refuses to pay and is known not to have the resources to pay.


    • tim has a personal mortgage on which he pays $8,000 a year in interest on.


    • sarah is required to get braces during the year and tim is required to pay according to the divorce agreement so he pays the doctor for the cost of $5,000.


    • tim was storing a set of brand new cabinets for his kitchen in his shed overnight in july until he could put them in the house. the cabinets cost $50,000 when he purchased them the day before. a tornado came through and destroyed the shed and its contents, which was not covered by the homeowner’s policy. the cabinets and shed were totally destroyed. the shed had little to no value before the accident.


    • tim at his employer is required to travel to alternate job sites certain days. he incurs automobile expenses associated with the job but is only partially reimbursed. he had mileage of 8,000 miles driven to clients during the year and his employer reimbursed him for .20 cents per mile.


    • tim also incurred overnight travel that his employer would not reimburse for at all. the overnight travel cost tim $4,000.


  • tim contributes $5,500 to a roth IRA during the tax year.

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