• Cynthia is an electrician, age 29, and single.
• Cynthia has investment income and has a consolidated broker’s statement.
• Cynthia began a cleaning service business in 2020. She was paid on Form 1099-
NEC for 2021. She also received additional cash receipts of $400 not reported on
the Form 1099-NEC.
• Cynthia uses the cash method of accounting. She uses business code 561720.
• Cynthia has receipts for the following expenses:
- $350 for cleaning supplies
- $225 for business cards
- $450 for a mop, broom, and vacuum cleaner
- $150 for work gloves
- $125 for lunches
- $175 for work clothes suitable for everyday use
• Cynthia has a detailed mileage log reporting for 2021:
- Mileage from her home to her first client’s home and mileage from her last
client’s home to her home – 750 miles
- In addition, on the days Cynthia worked for multiple clients, she kept track of
the mileage from the first client’s home to the second client’s home in case that
mileage was also deductible. She logged 450 miles (not included in the 750
miles).
- The total mileage on her car for tax year 2021 was 11,200 miles. Of that, 10,000
were personal miles. She placed her only vehicle, a pick-up truck, in service on
3/15/2020. Cynthia will take the standard mileage rate.
• Cynthia took an early distribution from her IRA in April to pay off her educational
expenses.
• Cynthia is paying off her student loan from 2018.
• Cynthia is working towards her Master of Business Administration (MBA) degree.
She took a few college courses this year at an accredited college.
92 Advanced Scenarios
• Cynthia purchased insurance for herself through the marketplace and has a Form
1095-A.
• If Cynthia has a refund, she would like it deposited into her checking account.
• Cynthia received the third Economic Impact Payment (EIP3) in the amount of $1,400
in 2021.
23. Cynthia’s net short-term capital gain reported on Schedule D is $_______
24. Cynthia cannot claim the work gloves as a business expense on Schedule C. true or false
25. What is the amount Cynthia can take as a student loan interest deduction on her
Form 1040, Schedule 1?
26. What is the total amount of advanced premium tax credit that Cynthia received in
2021? $____________
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27. Cynthia meets the qualifications to claim the Lifetime Learning Credit. True or false |
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28. Cynthia will not have to pay an additional 10% tax on the early withdrawal from her
IRA. True or false
| 29. Cynthia can make estimated tax payments to avoiding owing tax next year. true or false |
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