“Completing Nicole Student’s Federal and Illinois State Tax Returns for 2022”

QUESTION

Do tax returns for this scenario to do tax returns

The assignment is to do a tax return using the information provided below for Nicole Student.  Nicole is a student at U of I and is claimed as a dependent by her parents.  She lives at 523 East Healy, Champaign, IL  61820. Her social security number is 555-44-3321. Nicole earned the following income:

W-2 from XYZ Company    Wages 6843  Federal withholding 625     State Withholding    360

Interest income from Busey Bank of 15

You should use form 1040 for Nicole.

All forms and instructions needed can be found at www.IRS.gov

Use only 2022 forms and tax rates when preparing the return.

You may either hand write the forms or use the fill in feature at the IRS website.

Preparing a state of Illinois return as well.  Those forms can be found at https://www2.illinois.gov

ANSWER

Preparing Nicole Student’s federal and state tax returns for 2022 involves completing Form 1040 for federal taxes and the appropriate Illinois state tax forms. Below, I’ll provide a step-by-step guide on how to complete both returns.

Federal Tax Return (Form 1040):

Personal Information: At the top of Form 1040, fill in Nicole’s personal information, including her name, address (523 East Healy, Champaign, IL 61820), and Social Security Number (555-44-3321).

Filing Status: Since Nicole is a dependent, she will most likely file as a “Single” taxpayer.

Income

From the W-2 provided by XYZ Company, report her wages of $6,843 on Line 1.

Report federal income tax withheld ($625) on Line 4.

Report state income tax withheld ($360) on Line 5.

Add the interest income from Busey Bank ($15) on Line 9a.

Adjusted Gross Income (AGI): Calculate Nicole’s AGI by adding Line 1 and Line 9a.

Standard Deduction: Since Nicole is a dependent, she cannot claim the standard deduction. Instead, she’ll enter her total income from Line 10 on Line 12a.

Taxable Income: Calculate Nicole’s taxable income by subtracting Line 12a from Line 11.

Tax Calculation: Look up the tax amount based on Nicole’s taxable income and filing status in the 2022 tax tables or use tax software to calculate it. Enter the tax liability on Line 24.

Payments and Refundable Credits: If Nicole doesn’t have any other credits or payments, enter the tax amount from Line 24 on Line 25.

Refund: If Nicole’s withholding exceeds her tax liability (Line 4 is greater than Line 24), she will receive a refund. Enter the difference on Line 26.

Sign and Date: Nicole must sign and date the return on the bottom of Page 2.

Illinois State Tax Return (IL-1040)

Visit the Illinois Department of Revenue website at https://www2.illinois.gov and download the IL-1040 form for 2022.

Fill in Nicole’s personal information, including her name, address, and Social Security Number.

Income

Report the wages earned from XYZ Company ($6,843) on the appropriate line.

Add the interest income from Busey Bank ($15).

Tax Calculation: Follow the instructions on the IL-1040 form or use tax software to calculate Nicole’s Illinois state income tax.

Withholding: Report the state income tax withheld from her W-2 ($360).

Refund or Amount Due: Calculate whether Nicole is due a refund or has an amount due to the state. Include payment if necessary.

Sign and Date: Nicole must sign and date the state tax return as required.

Finally, make sure to check for any updates on tax forms or rates on the IRS and Illinois Department of Revenue websites, as tax laws and regulations may change. It’s also advisable to consult a tax professional or use tax preparation software to ensure accuracy and optimize any available tax credits or deductions.

Please note that this response is for informational purposes only, and it’s recommended that Nicole consult a tax professional or use tax preparation software for the most accurate and up-to-date assistance with her tax returns.