ACC – Karl and Ellie Frederickson’s 2012 federal income tax Probem



Use the following information to complete Karl and Ellie Frederickson’s 2012 federal income tax return.If information is missing, use reasonable assumptions to fill in the gaps.

You may need the following forms to complete the project: Form 1040 and Schedule A. The forms, schedules, and instructions can be found at the IRS website ( the instructions can be helpful in completing the forms.


Karl Frederickson is employed as a human resource manager for Toys Unlimited Inc. and Ellie is a financial planner for her mother’s company, Fredericksons Investments, Inc. , a full service wealth planning firm.They provide the following information:

They both want to contribute to the presidential election campaign

They live at 9876 Fighting Irish Lane, South Bend. IN

Karls Birthday is XXXXX and his Social Security Number is XXXXX

Ellie’s Birthday is XXXXX and her social security number is XXXXX

Karl or Ellie do not have any foreign bank accounts or trust.

Karl received a Form W-2 from Toys Unlimited Inc., which contained the following information:

Line 1 Wages, tips, other compensation 45,000

Line 2 Federal income tax withheld7,000

Line 3 Social Security Wages45,000

Line 4 Social Security tax withheld1,890

Line 5 Medicare wages and tips45,000

Line 6 Medicare tax withheld653

Line 17 State Income Tax2,200

Ellie received a Form W-2 from Fredericks Investments Inc. that contained the following information

Line 1 Wages, tips, other compensation 85,000

Line 2 Federal income tax withheld12,500

Line 3 Social Security Wages85,000

Line 4 Social Security tax withheld3,570

Line 5 Medicare wages and tips85,000

Line 6 Medicare tax withheld1,233

Line 17 State Income Tax4,200

Karl and Ellie incurred the following medical expenses for the year:

Transportation to Chicago for Karl’s cancer treatment2,000 miles

Unreimbursed hospital charges for Karl6,500

Unreimbursed prescription drugs charges for Karl and Ellie1,750

Unreimbursed physician charges for Karl and Ellie2,200

Laser hair treatment for Ellie(so that she will no longer have to shave2,000

Her legs)

Unreimbursed prescription glasses for Ellie150

Karl and Ellie paid 12,000 of interest payments on their primary residence (acquisition debt of 225,000). They also paid 1,750 of interest expense on Ellie’s car loan and 500 of interest on their Visa card.

Karl and Ellie paid 4,000 of real estate taxes on their home and 1,000 of real estate tax on a vacant lot they purchased with hope of building their dream home in the future.They also paid 3,000 in sales tax on Ellie’s car and other purchases of 1,000 of ad valoreum tax on their cars.

Karl and Ellie make the following contributions this year:

American Red Cross200

United Way150

St Joseph’s Catholic Church8,000

Food for the family of Hannah Barbara225

(A neighbor who suffered a tragic car accident this past year)

Stock transfer to the University of Notre Dame750

(Originally purchased for 1,000 in 2005)

Karl incurred 4,000 of unreimbursed meals and entertainment related to his job.Ellie incurred 1,200 of expenses for investment publications, and last year they paid their CPA 500 to prepare their tax return.

The roof on Karl and Ellie’s house was severely damaged in a hail storm.They had to replace the roof (7,500), which unfortunately was not covered by insurance because of their high deductible (10,000).

Karl won 5,000 in the state lottery.He has been playing the lottery for years (10 in lottery tickets every week (520 in total) that he saves to keep track of the numbers he plays)


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