ACC 330 Module 7 Project Two Example

The Complete Return: Tax Year 2024 Federal Income Tax for a Composite Ohio Household Filing Jointly

[Student Name]

Southern New Hampshire University

ACC 330: Federal Taxation I

Project Two

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

The Complete Return: Tax Year 2024 Federal Income Tax for a Composite Ohio Household Filing Jointly

Introduction

This project prepares the complete federal income tax return for tax year 2024 for the Columbus couple followed through the course, Jordan and Elena, filing jointly. Earlier modules established the pieces: three dependents, Maya, 15, Leo, 19, a full-time student, and Elena's mother, Rosa, 72 (Module Two); gross income items and exclusions (Module Three); hobby treatment for Elena's pottery (Project One); Elena's Schedule C, self-employment tax and qualified business income deduction (Module Five); the standard deduction (Module Six); and the property sales computed in Module Eight. All amounts are 2024 figures (Internal Revenue Service, 2023).

Income and Adjusted Gross Income

Table 1. Income and Adjusted Gross Income

The hobby income is reported with no offsetting expenses, following the conclusion of Project One. The capital gain is the net of a $8,500 stock gain, a $1,000 gain on an inherited lot and a $1,700 short-term crypto loss; the $150,000 gain on the old home is excluded entirely.

Deductions and Taxable Income

Table 2. Taxable Income

Regular Tax With the Capital Gain Worksheet

Because the return includes net long-term capital gain, tax is computed with the qualified dividends and capital gain worksheet rather than straight from the rate schedule. Ordinary taxable income is $77,834 minus $7,800, or $70,034. The gains sit on top of ordinary income, and because total taxable income of $77,834 is below the $94,050 top of the zero percent range for joint filers, all $7,800 is taxed at zero.

Table 3. Regular Tax

Credits

Three dependent-related credits apply: $2,000 for Maya under the child tax credit and $500 each for Leo and Rosa as other dependents. Leo's education qualifies for the American opportunity credit. His tuition was $9,800, but $3,000 was paid by a tax-free scholarship, so qualified expenses paid by the family are $6,800. The credit is 100 percent of the first $2,000 and 25 percent of the next $2,000, or $2,500, and the couple's income is below the $160,000 point where it begins to phase out (Internal Revenue Service, 2024a). Forty percent, $1,000, is refundable; $1,500 is nonrefundable.

Table 4. Credits Against Income Tax

Because income tax remains positive after these credits, none of the child tax credit needs the refundable additional child tax credit.

Total Tax, Payments and Refund

Table 5. Total Tax and Refund

Joint Versus Separate Returns

Module Two predicted that a joint return would be cheaper; the completed figures confirm it. On separate returns, Elena would report her Schedule C profit, the hobby income and the lot gain, and Jordan his wages, the stock and crypto results and the jury pay. Each would take a $14,600 standard deduction. Elena alone would owe the full $5,016 of self-employment tax, and the American opportunity credit, worth $2,500, would be lost entirely because it is not available to married taxpayers filing separately. The 0 percent capital gain range would also be halved for each spouse. Working the two separate returns through gives combined tax roughly $2,600 higher than the joint return, almost all of it from the lost education credit. There is no offsetting benefit, such as a medical deduction that only clears its floor on a smaller separate income, so the joint return is clearly better.

What Could Change the Result

Two judgment calls move the refund. Had the pottery been classed as a business, its $1,700 loss would reduce income and self-employment tax and turn the $744 refund into roughly $1,600. If Rosa did not qualify as a dependent, for example because the family's share of her support fell below half, the refund would drop by her $500 credit to $244. Both items were decided on documented facts, but the clients should keep those records, the support worksheet and the pottery receipts, in case either is questioned.

Summary of Key Decisions

Four decisions shaped this return. Filing jointly preserved the education credit and produced lower tax than separate returns. Treating the pottery as a hobby added $3,900 of income with no deductions, raising tax by about $468, a cost the clients accepted rather than risk an examination they would likely lose. Using the capital gain worksheet saved $936, since the $7,800 of gains would have been taxed at 12 percent under the ordinary schedule. And the American opportunity credit was worth $2,500, the largest single credit on the return. Bulman and Hoxby (2015) found that federal education tax credits did little to change whether or where students enroll, which suggests that for this family the credit is a welcome reduction in the cost of a decision already made rather than an incentive.

The refund is small, which is good planning: the household's withholding and estimated payments came close to its actual liability. For 2025, Elena should keep paying estimates of about $750 a quarter, since her self-employment tax alone exceeds $5,000 and Jordan's withholding does not cover it.

Conclusion

Jordan and Elena's 2024 return shows adjusted gross income of $113,632, taxable income of $77,834 and total tax of $8,456 after $4,500 of nonrefundable credits and $5,016 of self-employment tax. With withholding, estimated payments and the refundable part of the education credit, they receive a refund of $744 (Internal Revenue Service, 2024b).

References

Bulman, G. B., & Hoxby, C. M. (2015). The returns to the federal tax credits for higher education. Tax Policy and the Economy, 29(1), 13-88. https://doi.org/10.1086/683364

Internal Revenue Service. (2023). Revenue procedure 2023-34. U.S. Department of the Treasury.

Internal Revenue Service. (2024a). Tax benefits for education (Publication 970). U.S. Department of the Treasury.

Internal Revenue Service. (2024b). Your federal income tax: For individuals (Publication 17). U.S. Department of the Treasury.