Student instructions:
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Use publication IRS Publication 17 and California 540A / 540 Booklet to complete this topic.
Prepare the appropriate Federal and California forms for Margarita Gutierrez. Get all her basic information from the following W2, including income information.
Margarita (DOB 09/10/1965) is a single mom. For tax year 2007 she received the following:
 | Unemployment Compensation $ 985 |
| California State Refund $202 (she did not itemize last year) |
| Interest from First Bank $414 |
| California Lottery winnings: $ 911 |
Margarita has three children:
| Carlos Tovar, DOB August 6, 2001 (SSN 555-76-7755) |
| Anita Tovar, DOB September 15, 2000 (SSN 555-76-7754) |
| Javier Tovar, DOB December 30, 1990 (SSN 555-76-7753) |
Margarita paid rent $8,800 for tax year 2007.
March 12, 2007, Margarita placed a deposit of $180 (S 90 for each child) with a care provider to reserve a place for her two children Carlos and Anita in the child care facility. Her plans were for the facility to care for her children until her mother suggested that it would be great for her (Margarita's mother) to take of the children. As a result, Margarita forfeited her deposit.
In 2007, Margarita paid her mother Linda Gutierrez $ 2,100 ($1,050 for each child) for child care. Linda lives at 2350 Paseo del Bosque Dr, Los Angeles, CA 90010. Her number is 912-52-1060. Linda cared for both children.
Margarita is the only person that can claim the children. The children lived with her for all of 2007 tax year. She paid all of the household expenses and she was the only person supporting her children.
Margarita's son Javier turned 17 on December 30, 2007. He is a U.S. Citizen and Margarita can claim him as a dependent. Margarita was told by another preparer that she can get the child tax credit for Javier because Javier was 16 years old for the most part of the tax year.
In 2007, Margarita bought a new car for $ 9,000 cash and received a $ 400 rebate check from the manufacturer.
Margarita received $ 3,000 in alimony from Francisco Tovar (SSN 540-16-7021).
In 2007, Margarita makes a payment directly to an eligible educational institution for her son Javier's qualified educational expenses. She paid $ 2,000 for him on borrowed funds. These funds will be paid with a balloon payment at the end of 2008. Margarita is asking if she can take both the Hope credit and the Lifetime Learning Credits. Which credit can give her a higher deduction this year?
Margarita received tip income that she did not report because according to her employer she was not supposed to report tips for certain months that the amount did not reach a minimum reportable amount. Her employer included in Margarita's W-2 only tips that were more than the minimum amount to report. I asked Margarita to bring me just the totals of the tip income she received per month. The following list shows her tips received in their respective months.
Margarita will contribute the most that she can contributed to a traditional IRA on April 10, 2008 a few days before her return is due to be filed.
(Caution!: make sure you select the correct form for her to file!). --
Please choose only one of the following:
File Form 1040A / Form FTB 540A